Germany’s financial supervisory authority has published a statement where it clarifies the meaning of cryptocurrency tokens as the “unit of accounts” and the key requirements that need to be fulfilled by the operators that are dealing with these tokens.
BaFin clarifies on ICOs and its operators
The Federal Financial Supervisory Authority (BaFin) of Germany issued a statement where it defined the Initial Coin Offerings (ICO) and cryptocurrency tokens along with the conditions a crypto exchange have to comply with. The move has been made after the increased number of concerns from the cryptocurrency investors about the legal status of these tokens. This is the first official statement published by BaFin about ICOs and cryptocurrencies in general.
The article of BaFin is titled “Initial coin offerings: High risks for consumers” that at the first glance do seem like a warning but in actuality is a good news for German crypto investors. This article is a follow-up on the BaFin’s warning to cryptocurrency investors in November, last year.
A similar step that been taken by Switzerland where the FINMA, the financial regulator introduced ICO guidelines that were also in response to the increased number of inquiries on their legal framework.
Another instance of ICO regulations is the recent one in Wyoming, a US state, where a bill is passed that exempts certain tokens from security regulations if they meet particular requirements.
Cryptocurrency tokens are “units of accounts”
The published article talks about the definition of cryptocurrency tokens as they include the characteristics of securities, currencies and even digital products that makes them hard to understand and regulate.
BaFin has defined them as units of account. Also, they don’t fall under the securities regulation in Germany. Unlike the USA, where most of the tokens are categorized under the US securities law, German crypto community has it a lot better with softer and more precise regulations.
ICO Operators need to fulfill certain conditions
Going with the cryptocurrency tokens as units of account, the exchanges in Germany would be basically the exchanges of units of account. This also means, all of these exchanges that works with tokens i.e purchase or sell on a commercial basis, have to obtain an authorization in advance from BaFin.
There are certain conditions to obtain the license that comprises of:
- Having a sufficient capital i.e. between 25k-200k euro;
- Competent person that has worked at least 3+ years
- Must have a professional liability insurance
This ICO regulation clarification move is certainly a good news for all the cryptocurrency enthusiasts. It would be interesting to watch after Germany’s positive move on ICOs, which other countries will take a positive action.
What are your views on Germany’s take on ICOs? Do you think it will bring out more positive regulatory moves by other countries in the crypto market? Let us know in our comment section below!
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I am an entrepreneur and a writer with a bachelors degree in Computer Science. I manage the blockchain technology and crypto coverages at Coingape. follow me on Twitter at @arya_achal or reach out to me at achal[at]coingape.com.