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German banks have so far not been allowed to conduct their various businesses in cryptocurrency. However, a new law called the fourth EU Money Laundering Directive is going to revolutionize the way banks and customers interact. At its basic, the new law will empower banks to become the primary custodians of digital currency for their customers.
Local news agency Handelsblatt reports:
“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 German federal parliament, Bundestag, has approved the law. Now the bill is expected to be accepted by the country’s 16 states as well.
Previously, German banks had to rely on external custodian for any cryptocurrency-related transactions or other general services. The new law is going to open up a new sphere of customized services that particularly cater to that class of customers whose primary interest lies in digital currency.
The final version of the law is an end-product of iterative modifications that initially were about, in the first version, money laundering and its counter measures. The final version of the law has come a long way to include empowerment of the German banks to provide services in digital cash without relying on external custodians.
The New Law Is Celebrated in Crypto Circles
Crypto enthusiasts have warmly received the news of the final version of the law. The head of Distributed Ledger Consulting, Sven Hildebrandt, believes that Germany is treading on the path of crypto adoption and soon will be acclaimed as one of the foremost cryptocurrency-heavens in the world. The credit, according to him, goes to the legislation body that has been working hard to offer fully modern regulation of cryptocurrency.
Cryptocurrency can be a polarizing topic in Germany (and anywhere else for that matter). The previous few months saw German (and European legislators in general) come hard on Facebook’s forthcoming cryptocurrency Libra. Several other factors, including a traditional blockade on banks on crypto activity in Germany have been counter-productive for digital currency adoption in the country.
However, it seems that Germany is headed in the right direction with the fourth EU Money Laundering Directive which is being overwhelmingly supported by industry giants such as the Association of German Banks. It is a major lobbying group that has informed and motivated many previous financial laws. Recently, they published a paper that called for across board adoption of a “programmable digital euro.”