German Fintechs Rush to Offer Crypto Custody Services Under New Law
Fintech companies in the Federal Republic are quickly moving to develop and offer custodial solutions for digital assets under the new German legislation that will allow banks to store, transfer and trade cryptocurrencies next year. Berlin-based Solarisbank has established a subsidiary that will focus exclusively on the niche. The new entity and another German startup, Finoa from Potsdam, are planning to apply for new crypto custody licenses.
Also read: Skrill Now Lets You Swap BTC for BCH
Solaris Digital Assets to Apply for Bafin License
As an important partner of crypto companies in Germany and Europe, Solarisbank aims to be among the first financial institutions in the Federal Republic to start keeping cryptocurrencies. The tech company maintains a digital banking platform to which other businesses can connect and use its API to build and offer their own financial products and services. It obtained a German banking license in 2016 which allows it to operate also in other jurisdictions in the European Economic Area (EEA).
Solarisbank has been involved with important projects in the European crypto space such as the development of the crypto trading app Bison and the launch of the digital asset trading platform BSDEX by the Boerse Stuttgart stock exchange. Its partnership with cryptocurrency banking provider Bitwala allows customers in 31 EEA countries to have a German bank account with an integrated bitcoin wallet. The new subsidiary which was presented Wednesday will allow it to take full advantage of the new German anti-money laundering law permitting banks to hold cryptocurrencies.
Solaris Digital Assets will offer crypto custody services in compliance with the regulatory requirements of Germany’s Federal Financial Supervisory Authority (Bafin), the leading German business daily Handelsblatt reported. To be able to do so, the entity is going to apply with Bafin for one of the newly introduced licenses for custodial activities in 2020. Cryptocurrency storage solutions will be the new company’s main product at the initial stage but the subsidiary plans to expand its offerings in the future. Michael Offermann, Managing Director of Solarisbank’s Blockchain Factory, told the newspaper:
We have been working intensively on crypto custody for a year and a half. With the new regulation, a good time has come to start. After all, we are not a research institute but a commercial bank.
Bringing Fundamental Change to the Financial Market
According to the publication, Solarisbank will remain true to its well established approach to provide white label solutions. The company will offer the new service only to other financial institutions and business clients while private customers will not be able to open a direct account with the Solaris Digital Assets subsidiary. “So far, we have done well with our focus on business customer offerings. Our partners keep in contact with end customers and that should remain so,” Offermann stressed.
The Solarisbank executive believes that digital assets will fundamentally change the financial market. “As soon as the purchase and safekeeping of bitcoin and company becomes easier, we expect strong growth,” he added. Michael Offermann described the decision to create a separate entity instead of offering crypto custody directly through Solarisbank as a good move in case the regulatory environment in Germany changes again.
Since its establishment about three years ago, the fintech company has more than tripled its revenues to €7.4 million in 2018. At the end of last year, Solarisbank’s balance sheet totaled €120 million, Handelsblatt remarks. Its success is part of the rapid development of the crypto banking sector in the past few months and years that led to the introduction of a variety of new services in the space. Platforms like Cred, for example, offer bitcoin enthusiasts an opportunity to earn up to 10% on their BTC and BCH holdings through custodial services.
Another German startup that’s been working on a new crypto storage product is the Potsdam-based Finoa, which already operates as a crypto depository and claims to be serving over 50 professional investors. The company hopes to receive a provisional license from Bafin around the end of the year and, like Solarisbank, is going to apply for a full crypto custody license in 2020.
Do you think we are going to see more crypto custody services in Europe following the adoption of the new German legislation? Share your expectations in the comments section below.
Images courtesy of Shutterstock.
Do you need a reliable bitcoin mobile wallet to send, receive, and store your coins? Download one for free from us and then head to our Purchase Bitcoin page where you can quickly buy bitcoin with a credit card.