40 German banks apply to offer crypto custody

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Some 40 banks have applied to the German financial regulator for approval to offer crypto custody services, following a recent overhaul of anti-money laundering laws.

According to reports, the Federal Financial Supervisory Authority, or BaFin, has been inundated with requests from banks to offer the service, which covers the regulated storage of cryptocurrencies and other digital assets.

Press reports in Handelsblatt suggest banks in the country are aiming to offer digital asset services to a mass market, applying for licenses following the change in the law to gain the approval of the regulator.

Banks are required to apply for a license if they intend to offer a range of services alongside online banking, including accounts supporting bonds, stocks, cryptocurrencies and other digital assets.

There is currently a transitional period in force until November 2020. However, banks are required to notify the regulator if they intend to proceed with an application by March. Regulators expect a series of applications to follow, with a number of institutions currently offering services that will fall within the scope of the new regulations.

Michael Offermann, head of crypto banking at Solaris, said the bank is seizing the opportunity to begin offering crypto custody services. Solaris is one of the first banks to apply for the license.

“We have been dealing intensively with the topic of crypto custody for a year and a half. The new regulation in the new Money Laundering Act is a good time to start practically. After all, we are not a research institute, but a commercial bank,” Offermann said.

The German regulatory approach has also been welcomed by crypto custodians elsewhere, with a number of international firms in the sector setting up base in Germany in recent months. Among them is the U.S.-based crypto custody service BitGo, which set up bases in Germany and in Switzerland as it eyes further expansion across Europe.

The regulator has said the new laws apply both to domestic companies and to international companies offering services in Germany.

With the changes coming into effect for institutions as of November, time is of the essence for those intending to submit their applications.