29 November, 2019 | AtoZ Markets – Previously, banks did not have the right to offer direct access to crypto assets. Still, the new law transposing the Fourth European Money Laundering Directive would change that. That was according to the local business paper, the Handselblatt, in a report published on Wednesday. The Bundestag, the German federal parliament, has already passed the bill. However, the 16 states of the country will hopefully approve it.
German Banks Offer Cryptocurrency Under AML Law 2020
The bill goes beyond planning, according to the report. Previously, banks could not act as custodians of crypto and had to rely on external custodians or specialized subsidiaries.
Sven Hildebrandt, director of the DLC consulting company, welcomed the news. He said that Germany is on the way to become a crypto-heaven. The German legislator plays a pioneering role in the regulation of crypto assets.
German banking association BdB has also been positive about the legislation. "Credit institutions have experience in the custody of client assets and risk management, are committed to investor protection. And financial supervision has always controlled them," he said. Thus, banks could "effectively prevent money laundering and terrorist financing" with crypto assets.
According to the BdB, this bill would also allow investors to invest in cryptos via funds based in Germany. And they cannot invest their money abroad.
Read More: Cardano Launches Payment Gateway for Merchants
German Consumer Experts Express Worries
Some commentators have expressed concern about the threat of the new AML law. The consumer center in Baden-Württemberg fears that banks will engage in more aggressive sales with these new products. Financial expert Niels Nauhauser said banks are now targeting new customers using all means. And it may fail to inform customers about the potential risks of investing in cryptos.
Financial commentator, Fabio De Masi of the Left Party, warned that if banks seek to profit from cryptocurrency, the protection of financial consumers should not be jeopardized.
The new regulation is the concept of "cryptographic values," which appears for the first time in German law. It is a digital representation of a value. However, a central bank or public body has not issued that. But it is accepted as a means of exchange and payment or as a means of investment. This definition has not changed during the legislative process.
Think we missed something? Let us know in the comments section below.