Germany's Legal Framework for Cryptocurrency: Regulation and Oversight

Cryptocurrency is legal in Germany and operates under a well-defined regulatory framework. The Federal Financial Supervisory Authority (BaFin) classifies cryptocurrencies like Bitcoin as financial instruments under the German Banking Act (Kreditwesengesetz – KWG). This classification mandates that companies offering crypto-related services—such as trading platforms, custodial services, and crypto ATMs—obtain authorization from BaFin and adhere to anti-money laundering (AML) regulations. Since January 2020, crypto custody has been recognized as a financial service requiring BaFin's approval.

In addition to national regulations, Germany aligns with the European Union's Markets in Crypto-Assets Regulation (MiCAR), which aims to create a harmonized legal framework for crypto-assets across EU member states. MiCAR introduces requirements for transparency, disclosure, and operational standards for crypto-asset service providers (CASPs). Under MiCAR, CASPs authorized in one EU country can offer services throughout the EU via passporting, simplifying cross-border operations.

MiCAR is aimed at creating a harmonised European regulatory framework for crypto-assets that promotes innovation and enables use of the potential offered by crypto-assets while ensuring financial stability and investor protection (1).

Germany's proactive approach to cryptocurrency regulation reflects its commitment to fostering innovation while ensuring financial stability and investor protection. The collaborative efforts of BaFin and the Bundesbank in supervising crypto-asset activities underscore the country's dedication to maintaining a secure and transparent financial ecosystem.

Source:
(1) BaFin
(2) Deutsche Bundesbank

Last updated: 08-05-2025 Disclaimer: This article does not provide legal advice. If you need legal advice, please contact an attorney directly.