There are all indications that Germany is set to allow banks and other financial institutions start supporting the custody and sale of cryptocurrencies. If the new bill is passed, this development in the digital money markets could take effect as early as 2020. This will grow the list of crypto safe haven countries.
According to report by Handelsblatt, a Germany news outlet, the bill only requires consensus from all the 16 states. The legislation has already passed the Germany Federal Parliament, the Bundestag stage. This is a huge breakthrough for the German banking sector as the move seeks to overturn the existing ban on sale of cryptocurrencies.
New Crypto Haven in the Horizon
The announcement comes at a time when the crypto market is headed south with many investors bracing for hard times ahead. However, the initial draft bill comes with a “separation clause” for the banks to have dedicated custodial crypto subsidiaries. The current bill appears to have left this clause out. According to Handelsblatt:
“Starting in 2020, financial institutions will be able to offer their customers online banking, virtually at the touch of a button, along with classic securities such as stocks and bonds, as well as cryptocurrencies.”
The positive reaction from local market players is a clear indication that they have been denied the benefits of blockchain and crypto as well. The Head of Distributed Ledger Consulting, Sven Hildebrandt adds:
“Germany is well on its way to becoming a crypto-heaven. The German legislator is playing a pioneering role in the regulation of cryptocurrency.”
Boost from the Association of German Banks
The proposed bill is being supported by the Association of German Banks. The lobby group has over 200 financial institutions; their argument is that “supervised financial institutions have the experience and risk mechanisms to ensure client assets are secured”.
This is not the first time the Association is fighting to have blockchain and cryptocurrencies “legalized” in Germany. In October this year, the Association of German Banks came up with a paper proposing then need for a programmable digital Euro in the European economy.
Germans Cautioned on Cryptocurrencies
As the Germany financial sector anticipates the blockchain disruption, the Bundestag has cautions Germans on cryptocurrencies. The warning goes on to say that Bitcoin and other cryptocurrencies “are not real money”. The statement goes further to indicate that digital currencies are very volatile and their use cases are limited.
The statement adds that users should be cautious when investing on stablecoins. These are seen to have the potential to disrupt several sectors including the local monetary ecosystem. This was backed by Benoit Coeure, a member of the European Central Bank by stating that;
“The global stablecoin arrangements raise potential risks across a broad range of policy domains.”
However, the move will see the Germany government be keen on ushering in a new era of digital identity, deployment of smart contract to support smart machines among other areas. According to Thomas Heilmann, a German parliament member and a blockchain proponent;
“The home of the emerging token economy will be in Germany, just as Silicon Valley became a hotspot for previous innovations.”