Coinbase became the first company to obtain a crypto custody license to operate in Germany.
Coinbase has been approved for a crypto custody license in Germany, according to a press release from the German financial supervisory agency BaFin.
Legislation passed by the German parliament in 2019 required companies offering crypto custody services to apply for new licenses or cease operations in the country. The new legislation took effect on January 1, 2020, including strict guidelines for companies providing crypto-related services. While Coinbase is the first company to license it, German media outlet Handelsblatt hopes that the legal clarity of the new bill will encourage more banks in Germany to offer services related to crypto assets.
Coinbase’s efforts to comply with government regulations are not limited to Germany. Last week, the company announced that it had completed its registration with the Japanese Financial Services Agency. Once registered, Coinbase will be able to offer crypto trading of assets such as Bitcoin and Ethereum to customers in Japan.
After going public through a direct listing in April, Coinbase reported a profit of $771 million in the first quarter, tripling its earnings from the previous quarter. As Coinbase expands into new markets, having a solid foundation with legal support remains a top priority.
Unlike Coinbase, other cryptocurrency exchanges have come under scrutiny for lack of regulation.
Japan’s Financial Services Agency recently issued a second warning for operating without registration on Binance (the exchange was warned to operate without registration in 2018). Additionally, the UK Financial Conduct Authority recently banned Binance from offering crypto derivatives in the country. Binance is no longer able to serve customers in Ontario, Canada due to regulatory pressures.
It is not yet clear whether Binance’s lack of regulation will have a lasting impact on the company’s operations. But as crypto industry adoption grows, companies offering crypto services will need to be cautious to avoid a backlash from regulators.