Later last year, Switzerland-based Crypto Storage AG, a subsidiary of Crypto Finance AG, opened a German branch in Frankfurt called Crypto Storage Deutschland GMBH. The firm opened a branch in Germany so it could apply for the license, but around 15 banks turned the firm down before it found its current bank. Other crypto startups in the country are also facing similar challenges.
“There is no legal reason for banks to refuse services to crypto startups”
Matthias Winter, a partner at Eversheds Sutherland Germany, said that they get calls from several crypto companies that want to go to the German market to get regulated. Many of them have this issue. The firm is working directly with German regulators on how the law should be enforced. Matthias Winter also noted that there is no legal reason why banks would not offer bank accounts, but they are reluctant because they don’t understand the business.
BaFin will clarify uncertainties around the crypto custody licensing
Many crypto firms and institutions still have many uncertainties related to applying for the crypto custody license in Germany that BaFin will clarify over time. The industry is still grappling with the type of activities that would qualify as crypto custody, said Daniel Resas, associated partner with Schnittker Möllmann Partners in Hamburg. This firm advises banks on blockchain projects.
He further noted that the crypto exchanges could count as crypto custodians, but if it’s business model involves staking or putting a crypto asset into a smart contract for a limited period, then it is not clear whether that would be considered crypto custody under the current German law.