Blocknox, a subsidiary of Boerse Stuttgart Digital Ventures GmbH that has provided cryptocurrency custody service on an escrow basis, is looking to expand the service to its institutional clients.
Boerse Stuttgart revealed the plans in a Feb. 18 tweet, detailing that Blocknox’s crypto custody offer will also be available to fintech companies, banks and asset managers. In a separate announcement on the exchange’s website, managing directors at Blocknox Raphael Polansky and Dr. Ulli Spankowski said:
“With regard to the new legal regulation of crypto custody in Germany as of 1 January 2020, blocknox has already announced its intent to the supervisory authorities to apply for the required licence. This means the licence is deemed to have been granted provisionally. blocknox will submit the final application by the specified deadline. In this process, blocknox becomes a regulated financial services provider.”
Germany’s new crypto-friendly legislation
Last November, Germany proposed legislation that would enable banks to support the sale and custody of Bitcoin (BTC) and other digital currencies. While an initial draft of the bill had reportedly included a “separation clause” that would have required banks to make recourse to external crypto custodians or dedicated subsidiaries, the latest version of the proposed law removes this.
This would apparently streamline banks’ cryptocurrency-related operations. As announced at the time:
“Starting in 2020, financial institutions will be able to offer their customers online banking, virtually at the touch of a button, along with classic securities such as stocks and bonds, as well as cryptocurrencies.”
As a result, by Feb. 11, Germany’s Federal Financial Supervisory Authority received a deluge of applications from 40 banks seeking to become regulated cryptocurrency custodians. All market participants must nonetheless register their interest with the regulator by the end of March at the latest.
Surpassed expectations
The volume of applications reportedly outstripped the Finance Ministry’s expectations. Frank Schäffler, a member of parliament for the Free Democratic Party, said:
"The market is growing faster than the Federal Ministry of Finance has predicted. This is a blessing and a curse. The high demand […] shows that more and more firms accept blockchain technology, but can also be seen to be a result of the new legislation."