Zurich-based financial group Crypto Finance AG has secured four licenses from the German Federal Financial Supervisory Authority (BaFin). The licenses are for the group’s subsidiary Crypto Finance in Germany, allowing it to offer trading, settlement, and custody services for digital assets in the country.
The news comes at a time when interest in cryptocurrencies and other financial assets is soaring in the world’s third-largest economy Not only have local politicians advocated for Bitcoin adoption but both individuals and private institutions have also shown an increasing appetite for crypto exposure.
Institutional Interest in Crypto is Driving Competition
Crypto Finance has been redoubling its efforts to solidify its presence in the European crypto market after being acquired by the Deutsche Börse Group in 2021. The group acquired the firm to have a foundation for the creation of its “ecosystem for digital assets under European regulation”.
The four licenses mean that Crypto Finance can now operate as a digital assets manager both in Germany and Switzerland, where it is regulated by FINMA. The firm will continue to focus on offering “highly regulated services” to institutional investors, especially those “seeking access to the dynamic world of digital assets”.
Institutional interest in crypto and blockchain has been rising in Germany recently. Last year, Commerzbank became the first bank in the country to receive a cryptocurrency custody license. This year, Germany’s second-largest bank DZ Bank is set to pilot crypto trading. With more institutions exploring crypto-related services, competition is getting more fierce.
Deutsche Börse Group has referred to blockchain and distributed ledger technologies as “a game changer for the financial markets”. The group plans to launch its own cryptocurrency exchange known as Deutsche Börse Digital Exchange. While not many details are known at this time, the company was already included in the group’s 2022 annual financial report.
Say Hello to Tokenized Environmental Assets
Neutral and DLT Finance announced a partnership last week to launch the first platform for “tokenized environmental assets”. These tokenized assets include carbon and renewable energy credits, two markets that have been estimated to be worth over $103.8 billion and $11.4 billion respectively.
DLT Finance’s regulated services will make it possible for the platform to be launched in Germany, as the company holds the necessary BaFin licenses to operate in the country. Neutral’s technology, on the other hand, will allow users to buy, sell, and interact with tokenized environmental assets by enabling “efficient interaction and trade”.
According to Neutral Co-founder and CEO Farouq Ghandour, interest in such a platform has been increasing over the past years. However, with regulators failing to keep up with technological progress, companies offering such services have been unable to meet the demand. Ghandour called the partnership a “first step” to “bring legitimacy, price discovery, and liquidity to the on-chain environmental asset ecosystem”.
Crypto Adoption Is Growing in Germany
A survey by Paysafe found that 28% of German respondents had owned cryptocurrency at some point over the past 12 months. This percentage was significantly higher than that of Italy (17%) and Poland (8%), and only 4 points higher than France and the United Kingdom.
The survey also found that digital wallets could be the best vehicle towards widespread cryptocurrency adoption, as it was the preferred local payment method of 25% of all respondents. The company also concluded that the adoption of cryptocurrency and its related services was “likely to grow” due to crypto-friendly regulation.
A 2023 report by Chainalysis found that “trustworthy regulation and education provided to investors by institutions” was one of the most important elements driving growth in Germany. According to Dr. Sven Hildebrandt, the country also has “very strong historical routing in technical blockchain development” and the most jobs in the sector.
Regulation has long been seen as the enemy of cryptocurrency in the United States, where legislators and regulators can’t agree on a stance. However, Germany has managed to become an increasingly attractive destination for companies looking to harvest blockchain and DLT technologies.