Home News German regulators approve crypto custody license for Coinbase

German regulators approve crypto custody license for Coinbase

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Coinbase, the largest cryptocurrency exchange in the United States, has received permission from the German Federal Financial Supervision Authority (BaFin) to store cryptocurrency. It allows the site to continue serving customers in the country. Thus, in the coming weeks, the company will begin local operations in Germany for new and existing customers. After that, the value of the shares of the crypto exchange increased by 5% and reached $ 237.

Coinbase launched in 2012 in San Francisco. Coinbase currently holds 11.3% of the cryptocurrency market. The total trading volume on the site is $ 455 billion. More than 43 million accredited users keep their own assets on the exchange for more than $ 90 billion.

Coinbase shares have been listed on the NASDAQ stock exchange since April 14, 2021. Immediately after the opening of trading, the share price reached $ 381 with a set reference price of $ 250. Within a few hours, the shares rose in price by 12.5% ​​to $ 429.5. But then quotations fell to a local minimum of $ 315. The closing price on the first day of trading was $ 328.28.

On June 24, it became known that Coinbase also received permission to work in Japan. A subsidiary of the cryptoexchange received a corresponding license from the Japanese FSA, which controls financial activities in the country.

Coinbase holds the first cryptocurrency custody business license

At the end of 2019, the German parliament ordered all organizations that store cryptocurrency to obtain a license to operate at BaFin. The German subsidiary of Coinbase – Coinbase Germany GmbH – became the owner of the first license to conduct a cryptocurrency custody business issued by a German government agency.

It is worth noting that Germany has already allowed banks to sell Bitcoin in the past, but without a company authorized to act as custodian of funds with a special BaFin license, it was nearly impossible to start such activities in accordance with the law.

Recall that in March of this year, the German regulator recognized cryptocurrency as a financial instrument, therefore, cryptocurrency storage services have become a recognized financial service. As far as proprietary trading is concerned, it includes trading in stocks, bonds, commodities, currencies or other instruments.

As this is a new business model that emerged shortly after the entry into force of the law implementing the amendment to the fourth EU directive to prevent the use of the financial system for money laundering, BaFin has formed an interdisciplinary and interagency team to address issues related to the cryptocurrency custody business.

We add that the precondition for such a decision of the regulator was that with the introduction of the aforementioned law, the amendment on the business of storing cryptocurrency included in the German Banking Law.

Cryptocurrency investing dangers remain valid

The statement from the regulator emphasizes that BaFin regulates exclusively companies, and the digital assets themselves are not regulated. BaFin representatives also remind that all issued warnings about the dangers of investing in cryptocurrencies remain in force.

Earlier, the German regulator issued a warning about trading stock tokens on the Binance platform. BaFin has reported a “suspicion of violation” of securities regulation laws.

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