Just like supervisory authorities in other countries as well, the German Federal Financial Supervisory Authority (BaFin) has the task of ensuring a functioning financial system and protecting customers from "black sheep." Therefore, it is not surprising that the high amount of Bitcoin start-ups and the increased media exposure have prompted BaFin to take action. On December 19, 2013, BaFin published a comprehensive opinion and adopted a position therein on matters under supervisory law in respect to various business models.
Previously, the European Banking Authority (EBA) had already published their consumer oriented opinion on virtual currencies. Unlike BaFin, however, the EBA opinion of December 13, 2013 contains no clear legal conclusions. The Authority merely points to the actual, legal and tax risks, which accompany the acquisition, the holding and trading of cryptographic currencies such as Bitcoins. Among other things, the EBA warns about the risk that consumers can lose their money on untrustworthy trading platforms, for example, when the operator acts without the necessary official license and/or commits criminal acts (such as money laundering) and then must cease his business operation at a moment's notice.
Even if Bitcoins are commonly referred to as a digital "currency," this term is not correct in a legal sense. A certain unit may only be denominated "currency" or "money" if it is issued by a central bank. Bitcoins do not satisfy this requirement, in the view of BaFin they are therefore neither money, e-money, legal tender nor foreign exchange or foreign notes and coins. BaFin classifies Bitcoins instead as "units of account" within the meaning of the German Banking Act, i.e. as units of value not denominated for legal tender, which is at least comparable to foreign exchange.
Customers who just pay their bills with Bitcoins don't need to worry about a BaFin license. No BaFin license is also required for the mere use of Bitcoins as a substitute currency for sales activities: The entrepreneur can therefore accept the crypto-currency without problems as payment for his services or goods. Through this service alone, he still provides no banking transactions or financial service. In practice, however, it has been shown that also in this respect, the devil is in the details: It can already become a problem when the entrepreneur does not himself accept the Bitcoins, but rather makes use of a payment provider for the payment process, who forwards the Bitcoins received from the end customer to the entrepreneur or initially exchanges them and then distributes the corresponding euro amount to the entrepreneur. If the (possibly foreign) payment provider does not produce a BaFin license, even though one would be required, BaFin initiate legal proceedings against the entrepreneur.
The threshold for the obligation to obtain a license is fluid. If additional service elements kick into the pure use of Bitcoins, this threshold can be exceeded rapidly. Therefore, whoever not only mines, purchases and sells Bitcoins in order to supply himself with goods or services on the market, but participates in a way that helps to sustain, further or create a market will not get around obtaining a BaFin license. Even though this may be surprising for many parties concerned, for example, a proprietary trading business requiring a license according to Section 1(1a) no. 4 of the German Banking Act is already operated by someone who advertises externally (for example, on Internet forums or the like) that he regularly purchases or sells Bitcoins. The same normally applies to mining pools.