- The new law has removed the separation requirement which was present in the earlier version.
- German banks have experience in safeguarding the client’s assets, claims the German Bankers Association (BdB).
The European Union has recently proposed a new bill on the fourth Money Laundering Directive which will allow European banks to hold and sell Bitcoin. The bill is expected to come into effect in 2020. Earlier, banking institutions were not allowed to hold or offer any form of digital assets. The German Bundestag recently passed its own bill to implement it. However, further approval is required before the law can be enforced.
The new draft law has cast aside the separation requirement which was present in the first version. As per the separation requirement, the holding of Bitcoin and other digital assets should not originate from the same legal entity as other banking transactions. The banks had to rely on external service providers who offer an appropriate custody service.
With the new law implementation, banks in Germany will now be able to offer cryptocurrencies to their customers. They will also provide shares or securities in online banking. The industry experts have widely accepted and applauded the decision. Sven Hildebrandt, head of the consulting firm DLC, states:
Germany is well on its way to crypto heaven. The German legislator is playing a pioneering role in the regulation of crypto custodians.
The German Bankers Association (BdB) reported that the banks have ample experience in safeguarding the client’s assets. Besides, banks have been regularly monitored by the Financial Supervisory Authority and are under constant observation. However, few critics believe that the banks may vigorously advertise cryptocurrencies. Financial expert Niels Nauhauser explains:
Basically, banks sell a wide variety of financial products if the commission is right. If they are allowed to sell cryptocurrencies and store them for a fee, there is a risk that they will sell their customers assets with a total risk of loss without them knowing what they are getting into.
According to the economist Fabio de Masi, the banks have been eyeing this opportunity to delve into this lucrative business. He further stated that the bank should have enough information on cryptocurrencies to avert possible risks. He said:
The banks are hot on profits from crypto transactions. But financial consumer protection must not be undermined.
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