Coinbase has become the first company to receive a crypto custody license to operate in Germany.
Coinbase Embraces German Regulation
Coinbase has been approved for a crypto custody license in Germany, according to a press release from the German financial supervisory body BaFin.
Legislation passed in the German parliament in 2019 required companies offering crypto custody services to apply for new licenses or cease operating in the country. The new legislation came into effect on Jan. 1, 2020, including precise guidelines for companies offering crypto-related services. While Coinbase is the first company to receive a license, German media outlet Handelsblatt hopes the legal clarity of the new bill will encourage more banks in Germany to offer services around crypto-assets.
Coinbases efforts to comply with government regulations are not limited to Germany. Last week, the company completed registration with the Japanese Financial Services Agency. Once registered, Coinbase can offer crypto trading of assets like Bitcoin and Ethereum to customers in Japan.
After going public via a direct listing in April, Coinbase reported Q1 profits of $771 million, tripling its earnings from the previous quarter. As Coinbase expands into new markets, having a firm foundation with regulatory backing continues to be a top priority.
In contrast to Coinbase, other cryptocurrency exchanges have come under scrutiny for their lack of regulation.
Japan‘s Financial Services Agency recently issued a second warning to Binance for operating without registration (the exchange had been warned about operating without registering in 2018). Additionally, the U.K’s Financial Conduct Authority recently banned Binance from offering crypto derivatives in the country. Binance is also no longer serving customers in Ontario, Canada, due to regulatory pressures.
Whether Binance‘s lack of regulation will have a lasting effect on the company’s operations remains to be seen. However, as crypto adoption increases, companies offering crypto services will need to tread carefully to avoid backlash from regulatory agencies.
