Anyone wishing to conduct crypto custody business in Germany commercially or on a scale which requires commercially organised business operations needs prior written authorisation from BaFin in accordance with section 32 (1) sentence 1 of the KWG.

For the majority of financial services under section 1 (1a) of the KWG, companies that hold authorisation to provide a specific financial service may also provide that service in relation to crypto assets. This does not apply to crypto custody business, however, as those who already hold authorisation to provide financial services require an additional authorisation to conduct crypto custody business.

Detailed information on the definition of crypto custody business and the authorisation requirement can be found in BaFin’s Guidance Notice on the statutory definition of crypto custody business.

The authorisation procedure for companies seeking to conduct crypto custody business within the meaning of section 1 (1a) sentence 2 no. 6 of the KWG is based on section 32 (1) of the KWG. The general outline of the authorisation procedure for crypto custody business and the main requirements for granting authorisation can be found in BaFin’s guidelines on the authorisation procedure (only available in German). Crypto custody business is also subject to the Deutsche Bundesbank’s Notice on the granting of authorisation to provide financial services of 6 July 2018.

BaFin has established a central contact point for crypto custody business. Companies considering applying for authorisation can contact either BaFin or the competent Regional Office of the Deutsche Bundesbank before starting the application process. BaFin’s central point of contact can be reached here:

Please note the following information on secure e-mail communication with BaFin.

As a general rule, every application for authorisation is different since the issues that need to be examined depend on the business activities that require authorisation and the type, scope and complexity of the business model, business organisation and owner structure. The duration of the authorisation procedure therefore depends on various factors. Some of these factors include the amount of time the applicant takes to respond to any queries that BaFin has and, in particular, the quality and completeness of the documents and information provided. As a result, it can take several months or even longer for a decision to be reached after an application for authorisation has been submitted.

BaFin charges fees for individually attributable official acts (see section 1 of the Fees Regulation in respect of Financial Services Supervision (Finanzdienstleistungsaufsichtsgebührenverordnung – FinDAGebV)). These acts include granting authorisation to provide financial services under the KWG. In most cases, no. 5.1.12.1.2.2 of the schedule of fees (Annex to section 2 (1) of the FinDAGebV) applies to the authorisation to conduct crypto custody business. An individual fee for processing the application is then calculated based on the amount of time required for processing, which is measured in working hours. The general hourly rates for federal administrative staff (see section 3 of the FinDAGebV) set out in Annex 1 Part A of the General Fees Regulation (Allgemeine Gebührenverordnung) are applicable for the hours worked by federal administrative staff.

Yes, institutions may simultaneously hold authorisation to conduct crypto custody business within the meaning of section 1 (1a) sentence 2 no. 6 of the German Banking Act (Kreditwesengesetz – KWG) and to provide crypto securities registration services within the meaning of section 1 (1a) sentence 2 no. 8 of the KWG.

The explanatory memorandum on the implementation of the Amending Directive on the Fourth EU Anti-Money Laundering Directive sets out that all digital representations of value are covered under section 1 (11) sentence 4 of the KWG in the interest of ensuring the prevention of money laundering comprehensively. In addition to tokens with an exchange or payment function – which are already covered as units of account within the meaning of section 1 (11) sentence 1 no. 7 of the KWG – the definition of crypto assets also includes tokens used for investment, e.g. security tokens and investment tokens which may also be categorised as debt securities, investment products or investment funds under section 1 (11) sentence 1 nos. 2, 3 and 5 of the KWG. In addition, the explanatory memorandum sets out that a crypto asset can also serve investment purposes if the asset is designed to reflect, in a way that can be valued or calculated, expectations similar to what investors would expect from the asset’s performance or the general business performance of the issuer or a third party. However, crypto assets may, due to their specific characteristics in individual cases, belong to another category of financial instruments within the meaning of section 1 (11) sentence 1 of the KWG. For example, if crypto assets fall under the definition of

BaFin’s guidance on anti-money laundering requirements offers an overview of the anti-money laundering requirements that must be met by institutions conducting crypto custody business as newly obliged entities under the German Money Laundering Act (Geldwäschegesetz – GwG). Moreover, obliged entities that transfer crypto assets are required to fulfil specific due diligence requirements under the German Crypto Asset Transfer Regulation (Kryptowertetransferverordnung – KryptoWTransferV). This includes the requirement that the crypto asset service provider submit the name, address and wallet address of the payer and that the payee’s crypto asset service provider verifies this data, in line with the requirements under the EU’s Funds Transfers Regulation. In certain circumstances, an exemption from these requirements may be granted after a notification has been submitted to BaFin.