German companies may not be able to obtain MiCAR crypto licenses from BaFin by the end of the year

Most of Europe's Crypto-Asset Market Regulation (MiCAR) will come into effect at the end of this year, but due to the failure to pass some legislation, German companies cannot obtain MiCAR cryptocurrency licenses issued by local regulator BaFin. But foreign companies licensed elsewhere can operate freely in Germany and throughout the EU. It is understood that some MiCA details are country-specific. For example, each country must designate a regulator to issue licenses for crypto-asset service providers (CASPs), which in Germany is the Federal Financial Supervisory Authority (BaFin). However, designating BaFin is part of a draft law that has not yet been passed. Given the collapse of the coalition government, the bill is unlikely to be passed in the short term. This will also affect banks, because institutions such as banks or securities companies can extend their licenses to qualify as MiCAR CASPs. BaFin cannot do this yet. In addition, Germany had cryptocurrency regulations before MiCAR. The draft law stipulates that authorized companies can continue their activities and reapply for MiCAR licenses next year. The first draft of the Financial Market Digitalization Act (FinmadiG) was published in October 2023 and introduced the Crypto Market Regulation Act (KMAG), which will replace Germany's old crypto rules with MiCAR. Earlier this week, a group of German academics wrote to the Finance Committee of the German Bundestag, highlighting that Germany is in violation of EU law. The German implementing law was supposed to take effect on June 30, when the legislation on stablecoins (electronic money tokens) came into effect.