Germany is traditionally seen as a trustworthy player in the financial space, not least because of its approach to regulation. Deutschland’s compliance approach and traditional conservative values when it comes to finance made it an unexpected, but natural
successor to carry the crypto torch when it put itself on the path of allowing banks to accept bitcoin deposits. In fact, not only Germany, but Europe in general has, historically been at the forefront of financial innovation.
Why is this a positive signal? Economic history and the German role in the development of financial services.
While banking originated in Italy, the more modern instruments also took root in Europe, mainly in Germany.
We often forget, that Germany has traditionally been at the forefront of finance, in fact, pioneering investment banking – with most of the founders that launched in the United States, having originated in German institutions (Baring, Rothschild, Schroeder,
and Kleinwort). Germany’s tradition of working closely with government finance provided the perfect platform for a structured, level headed and globally trusted approach to new assets, which is what makes their move both exciting and foretelling.
And while crypto has been uncharted territory for many, precedent is key. Once best practices even if still at the stage of maturity emerge, it presents a firm foundation upon which other regulators and jurisdictions can build, and here too European players
have taken a lead presenting a clear position.
German institutions have not only legitimized digital assets further, they have once again shown an art for providing new tools for the financial industry.
If history is anything to go by, and in economics, that is key, it is a foregone conclusion that this move is close to monumental. There has not been a clearer signal that crypto is here to stay.
The 5th AML Directive in 2020, that outlines the EU’s guidance for cryptocurrency lends further support.
The regulations provide clear guidelines for cryptocurrency wallets and exchanges, paving the way for new business, stimulating growth and providing investor protection – exactly what’s needed for stable and growing digital asset use. What’s more important,
this puts the EU in line with the regulations in the US, providing a common AML space for businesses to flourish.
As Bequant CEO, I believe for institutional players, this means that further interest in bitcoin is a foregone conclusion. Competition will ensure that other countries will begin to follow suit, with demand for the asset and its investor base expected to
Finally and perhaps more importantly, it seems to overwhelmingly suggest that additional investor protection will make the market even more attractive– not least because retail bitcoin deposits by banks will have to be insured and smaller private investors
will be able to access secure institutional grade insurance at competitive rates.