BaFin, the German Financial Supervisory Authority, has defined cryptocurrency as a financial instrument. As per a press release from BaFin, ‘Cryptocurrencies are a digital presentation of value’ with the following characteristics:
- These cryptocurrencies are not issued by any central bank or government body
- These can be used between individuals/ legal entities as a means of exchange
- These can be transmitted, stored and traded electronically
- The cryptocurrencies can be used for investment/ as investment instruments
BaFin says that cryptocurrencies should not be confused with electronic money that have got other laws to govern them.
The German parliament had already passed a law allowing banks to deal in cryptocurrencies. This law came into force from 1 January 2020.
These developments will guide other countries while formulating their local regulations for cryptocurrencies. And will help them to be mainstream.