Bitcoin Bank Revolution – 40 German banks in the starting blocks

Many are wondering what could trigger a possible next nationwide hype around crypto currencies like Bitcoin. Most of them think directly of the end of 2017, when the price of BTC and many other coins shot through the ceiling. Not only the halving in May this year is considered a hot candidate for a long-term upward trend. Also the expansion of the infrastructure in the crypto sector, which has increased strongly since 2017, could continue to spur the prices as interest increases. This also includes the legislation in force in Germany since January 1, 2020, which allows banks to store crypto currencies and offer corresponding services. New figures show that many banks are very interested in securing corresponding licenses. Are banks worried about the next bull run with their crypto services?

 

Bitcoin trading allowed since 2020

The Fifth European Money Laundering Directive has been in force since 1 January. This includes not only regulations on classic financial classes, such as shares or bonds, but also on cryptocurrencies, such as Bitcoin. In short, banks are legally allowed to treat Bitcoin and Co. like shares and bonds.

A bank could go there and offer its customers coins at the push of a button via online banking. But not only that: in principle a whole range of services from buying, selling and custody are possible.

However, this does not only apply to BTC, but to all kinds of tokens, as the law defines them as follows according to the Handelsblatt Cryptos:

“Digital representations of an asset that has not been issued or guaranteed by any central bank or public entity and does not have the legal status of a currency or money.”

 

The banks’ run on licenses has begun

As the Handelsblatt reported on 7 February, it had information from government circles that the BaFin “has already received more than 40 expressions of interest from banks for a licence to operate the crypto-custody business in future”. Frank Schäffler, member of the German Bundestag, said

“The market is growing faster than the Federal Ministry of Finance predicted. …] The high demand for crypto-deposit licenses shows that companies are increasingly adopting block chain technology, but is also a result of the new legislation.”

The 40 banks are not mentioned by name in the reports. Only one example is given: the Berlin Solarisbank. This bank has founded the subsidiary “Solaris Digital Assets” especially for the crypto business.

Germany the new Crypto Valley?

Of course, the new legal situation does not or not exclusively aim to push Bitcoin and Co. Rather, it is intended to ensure that trade is conducted through banks that comply with the usual money laundering laws. This is intended to prevent crypto-currencies from being used for criminal purposes.

As Frank Schäffler has already mentioned in the above quote, this gives Germany a locational advantage and could become the new “Crypto Valley” in Europe. Brexite and the resulting weakening of the financial centre in London could also help Germany, especially the Frankfurt location. So says Berlin:

“This gives us almost a unique selling proposition that will help us bring the reputable providers to Germany.”

 

Bitcoin Course Boost by Banks?

It is a fact that more interest in Bitcoin and Co. from the mainstream is needed to get new people into the field and to keep the share prices up in the long term. The new services made possible by the new legal situation can make a massive contribution to this.

Imagine the Bitcoin price rising continuously through the halving until the current all-time high (ATH) from December 2017 is broken. The past shows that often there is no holding back after reaching the ATH.

If the barrier to investing in Bitcoin is as low as in shares, this naturally attracts all the more buyers. This point was one of the key reasons why the Bullrun 2017 came to an end. The Exchanges were too overloaded at the time and could not keep up with the creation of new accounts. This meant that not as much new money could flow into the market as would have been possible. Looking forward to 2020, the upcoming halving and the progress of the Bitcoin adoption at banks, we can be excited about such a scenario.