Crypto Exchange in Germany: Regulations And License
Germany's approach to crypto exchanges
Once they have been mined, cryptocurrencies can be traded on special trading platforms (Exchanges) outside of the usual stock exchanges and Forex platforms. After registration and logging into the respective trading platform, users can then exchange either their own mined and acquired crypto assets into fiat currencies (euro, dollar, yen, etc.) or purchase them from other users.
Exchange rates on different platforms
The exchange rate for the exchange of cryptocurrencies into fiat currencies results from the general rules of supply and demand: If more market participants want to buy Ether than others want to sell them, the price rises. If the pressure to sell Bitcoin is greater than the interest of potential buyers, the price falls. In practice, the prices quoted on different trading platforms frequently differ significantly despite being quoted at the same time.
Business model of cryptocurrency exchanges
The business model of crypto exchanges in Germany consists mostly of imposing exchange fees for purchases and sales - generally in the amount of a small percentage of the transaction volume. The increasing interest in alternative currencies and the rising volume of transactions allow providers to achieve a solid profit despite mostly moderate fees. As a crypto exchange, the platform Coinbase is even listed on the American Nasdaq.
Crypto exchanges usually require a BaFin license
Exchanges operating in Germany are subject to regulation by the German Financial Supervisory Authority (BaFin) and usually require their own BaFin license or a carefully designed cooperation with a banking partner under whose liability umbrella they can then slip as a so-called "contractually bound intermediary".
The legal requirements for such a liability umbrella construction are very high, the necessary contract design extremely complex and ultimately not without residual risk for the parties involved.
Our legal services for crypto exchanges
Are you planning to operate a crypto platform or an exchange for cryptocurrencies such as Ethereum or Litecoin in Germany? We would be happy to plan your specific business model with you and clarify the legal and tax issues that arise in this regard.
Your cryptocurrency exchange attorney
Do you plan to operate a crypto exchange in Germany?
will gladly provide advice regarding your specific business model and clarify respective legal questions. You can reach them via e-mail (firstname.lastname@example.org) or by phone (+49 69 76 75 77 80).