Germany CASP License

BaFin is Germany’s Federal Financial Supervisory Authority that provides official authorization for financial businesses. BaFin acts as an entry point for the applicants as it oversees the safety and protection of the financial sector in Germany.

The types of business activities required to obtain a Germany CASP license will include exchange Services, custody and administration of crypto assets, placement of crypto assets, operation of trading platforms, execution of client orders, investment advice on crypto assets, portfolio management, reception of orders and transmission of orders.

The key features of the updated regulations by MiCA for CASP license in Germany are:

• BaFin will remain the responsible authority, but it will operate under the standards of MiCA.
• A transitional period was introduced; old licenses are valid for a limited time until a CASP license is submitted.
• In accordance with MiCA and the TFR, the procedures of AML/ KYC must be updated.
• The IT security and protection of the client assets requirements have been strengthened.
• Segregation of company funds and client funds is protected by law and remains a basic regulatory principle.

The post-licensing requirements after obtaining a Germany CASP license include:

• Adhere to all national and MiCA regulations.
• Conduct continuous monitoring and update the procedures of AML/KYC.
• Submit regular reports to the responsible authorities.
• Ensure internal and external audits are done regularly.
• Protect the client’s assets and ensure their confidentiality.

In Germany, the crypto-assets are treated as intangible private assets and not as currency. Therefore, it attracts an individual income tax and not a capital gains tax. When the crypto-asset is disposed of, the tax rules will change depending on how long you have held your crypto.

If you have held it for more than a year, you can dispose of it completely tax-free. Additionally, if you sold, exchanged, spent or swapped your crypto in Germany within one year and made a loss, you do not have to pay tax on it.

No, you cannot apply for a CASP license in Germany without having a German legal entity. To apply for a CASP license, you will need a locally registered company, deposit a minimum capital and register an office space. Only after this can you apply for a Germany CASP license and enter the crypto market under BaFin and MiCA’s supervision.

A Germany CASP license will take around 6 to 12 months through BaFin. After the application, the official regulatory review and evaluation will take around 3 to 4 months. However, currently, due to the high volume of applications, the time required may be extended, and therefore, early submission is necessary.

Yes, the Germany CASP license is limited to legal entities. You cannot apply for a CASP license as an individual; you will first have to incorporate a company within Germany to be eligible to obtain a Crypto-Asset Service Provider (CASP) license.

Along with MiCA and BaFin, the other authorities regulating crypto activities in Germany are:

• Banking Act and financial supervision (KWG).
• Securities market regulation and the EU Markets in Financial Instruments Directive (MiFID II).
• Regulation on the publication of investment prospectuses.
• German Capital Investment Code (KAGB).
• Electronic Securities Act (eWpG).
• Anti-Money Laundering Act (GwG).
• Insurance Supervision Act (VAG).
• Payment Services Regulation (ZAG).
• General Investment Code of Germany.

The Germany CASP license regulations ensure transparency, security and trust between the service providers and the users; it also gives you access to the 27 member states of the EU. It also guarantees the protection of client assets and confirms that your company has met the stringent standards of financial oversight.