5 Things You Need To Know About Cryptocurrency Regulation in Germany

Before the onset of digital currency regulation, cryptocurrency had an injured reputation. 

The absence of formal structures to monitor and regulate this area led to exchange and money laundering activities. It has been associated with ‘dirty money’ (money from drugs, corruption, and trafficking.)

Some countries up until now have not regulated cryptocurrency and somehow completely banned all activities involving cryptocurrency. 

Germany happens to be one of the countries that have clear regulations on the operation of digital assets or crypto assets.

For someone who wants to venture into cryptocurrencies in Germany, you will find this article useful.

We shall look at all the regulations, institutions, and legal frameworks behind cryptocurrency in Germany.

1. Regulation instruments and institutions

Before looking at the regulation instruments and institutions it is only fair that we go through a brief glossary of terms to make it easier to understand cryptocurrency in Germany.

• Cryptoassets.

The term “cryptocurrency” in Germany is purposefully left out because they do not see cryptos as currencies but as units of accounts. 

We are going to look this up later when you shall be discussing taxation. 

• Ba-fin 

The Federal Financial Supervisory Authority (Ba-fin) is the main regulator of crypto assets in the country. 

• Obtaining a Ba-Fin license 

Obtaining a Ba-fin license is the very key to trading in cryptocurrencies in Germany. It will allow you to purchase, mine, and sell your crypto assets. 

The main reason why obtaining a Ba-Fin licence is very important is for the purposes of creating accountability on the part of players in the crypto exchange as well as to minimise cases of scams and fraud.

Further guidance on obtaining a Ba-Fin licence can be given to you by a financial service company.

You can visit De.collected.reviews to read reviews about German online financial services before settling for one.

Regulation instrument’s

The two main regulatory instruments for crypto assets in Germany are;

• German Banking Act (Kreditwesengesetz – KWG)
• Anti money laundering directives

2. Where can I buy crypto assets in Germany

Banks and other financial institutions in Germany have been given custody over crypto assets.

However, not all institutions can exchange crypto assets. 

A person can only buy or sell crypto assets from a Ba-fin licensed exchange, custodian or a bitcoin ATM. 

3. Is there taxation of crypto assets in Germany?

Crypto-assets in Germany come with a lot of tax benefits. It is commonly misunderstood that Germany does not tax cryptos, they do. 

Any crypto asset that is above €600 is subject to taxation.However if you hold your crypto assets for more than a year  you shall be exempted from capital gains tax. 

4. Safeguarding means and methods of f crypto assets. 

Before an institution is licensed, it must satisfy the requirement of Crypto Custody Business. 

The requirement is placed to ensure that the institution has the means to safeguard crypto assets before they are granted permission to be a custodian. 

There should be enough protection of physical storage of data carriers as well as the tokens. 

All the instructions of licensing have been outlined by the German banking act (KWG).

5. How to buy cryptocurrency in Germany.

The simple steps of buying cryptocurrency in Germany is outlined below;

1. Find a cryptocurrency exchange

There are many licence crypto assets exchange services in Germany and before making the decision to buy a crypto asset, you must take some time to compare cryptocurrency exchange services.

Take into account factors like their ratings, processing time and the acceptable payment methods.

After finding the best cryptocurrency exchange, move to the next step.

2. Create a crypto account with the exchange

All licensed exchanges are under strict obligation to get accurate and collect information about the person opening an account.

You will have to submit all the documents that identify you. i.e the names, birth, Email address as well as physical address, e.t.c

3. Get verified

Your document will be processed and once you get verified you can now make your first deposit.

4. Make your first deposit

Using your credit card, debit card or a direct bank account you shall make your first deposit to your account.

5. Buy the type of crypto asset you want

The final step is to place an order of the type of crypto asset you find best to purchase. 

Bottomline:

Investing in cryptocurrency can be very profitable but with it comes a lot of risks and challenges and only proceed with caution. 

Gather all the information you need and only buy or sell your crypto asset after careful consideration.