Bitcoin
$ 32,623
Ethereum
$ 1,254.8
Litecoin
$ 141.29

German Banks Gets Bill to be Custodians of Cryptocurrency

The federal parliament of Germany has drafted a bill that, if enacted, will allow banks to become custodians and merchants of cryptocurrency in 2020, German business newspaper Handelsblatt reported Wednesday.

Join the fastest growing network on Telegram

The move represents a bombshell milestone in adoption and could, in theory, make crypto as liquid as cash in the world’s fourth-largest economy.

The new Bundestag bill proposes the deletion of a clause in the European Union’s Fourth Anti-Money Laundering Directive that prohibits banks from directly dealing in cryptocurrency. Since 2017, the directive’s “separation bid” has required all EU banks to conduct crypto operations through third-party custodians and subsidiary entities.

If the bill is adopted as expected, starting next year banks, operating in Germany will be legally allowed to store crypto and securities like stocks and bonds and offer them to customers — likely as they would cash.

Banks Adopt Cryptocurrency

The Association of German Banks a.k.a. “BdB” lauded the possible regulation changes, stating banks “are experienced in the safekeeping of client assets and in risk management,” and “are committed to investor protection.”

Others aren’t so sold on the motives of banks or their commitment to “investor protection.” The consumer protection watchdog from Germany’s third-largest state, Baden-Wuerttemberg, is concerned banks could aggressively pitch crypto to uneducated customers and put them out of pocket. They stated:

“Basically, banks sell a variety of financial products, if the commission is right. If they are allowed to sell cryptocurrencies and keep them for a fee, they run the risk of turning their assets at risk of total loss to their clients, without them knowing what they are getting into.”

Can Banks Control Cryptocurrency?

The bill may be a portent of a coming power grab by banks, one where financial institutions attempt to dominate crypto with the almighty level of control and profit they enjoy in the currency market.

It has long been feared that banks would enter in this fashion and corrupt Bitcoin and broader crypto with opaque controls like fractional reserves. In fact this particular possibility was described ten years ago as being the “ultimate fate” of Bitcoin by early crypto pioneer Hal Finney.

A more immediate possibility is the enforcement of banking-style controls over crypto — aside from the German bill, this is becoming a reality in a number of key markets. In October, the U.K. Financial Conduct Authority announced that as of 2020, all crypto businesses, ATMs, and even open-source wallets, will be required to collect KYC information on users.

Central banks are the largest institutions in the FX market and hold reserves of their own fiat currency in addition to foreign currencies for trade and strategic purposes. By controlling domestic monetary and commercial banking policy, central banks exercise broad powers over short, mid, and long-term trends in the currency markets.

Recently, the Federal Reserve has been pumping money into the American economy for weeks on end and many economists believe the stimulus won’t help. The central bank has slashed interest rates multiple times during the last few months and injected more than $270 billion to the balance sheet since September. The Federal Reserve is now adamant that interest rates will remain unchanged for now, but federal debt has surpassed $22 trillion this year.

Related Posts

Leave a Reply

Newsletter

Subscribe To Newsletter

For updates and exclusive offers, enter your e-mail below.

Popular Posts

Kenya Finance Act takes effect, charging 1.5% tax on digital currencies
January 23, 2021By
Concordium Becomes First Blockchain Member of FinTech Association of Japan
January 23, 2021By
Football Club Dynamo Kyiv Partners with Moonwalk to Develop Digital Ecosystem
January 22, 2021By

Advertisement

Video Posts

In
Solving Gender Inequality Using Blockchain S2 (Ep2): A Blockchain Solution To Close The Gap
January 22, 20210
In
Africa Digital Finance Summit 2021
January 20, 20210

Crypto Stats


CryptoCurrencyUSDChange 1hChange 24hChange 7d
Bitcoin32,623 1.36 % 3.28 % 11.32 %
Ethereum1,254.8 1.42 % 7.25 % 7.08 %
Tether1.000 --- 0.37 % 0.18 %
Polkadot18.01 1.41 % 10.09 % 36.49 %
XRP0.2751 1.71 % 3.73 % 1.87 %
Cardano0.3517 0.73 % 7.65 % 16.23 %
Chainlink23.84 1.43 % 16.68 % 15.68 %
Litecoin141.29 0.46 % 1.27 % 1.80 %
Bitcoin Cash436.27 1.23 % 2.79 % 10.97 %
Binance Coin41.12 1.73 % 2.57 % 0.29 %