Using virtual currencies (“VC”) for the banking business is a relatively new trend. It is not yet used by most of the companies or people and the actual scope of application still has to be figured out.
In Germany a bitcoin is deemed to be a financial instrument, which is regulated according to the German Banking Act (Kreditwesengesetz – “KWG”). With regard to banking business and financial services anti money laundering and data protection regulation are also to be complied with.
Whether a license is needed in this context depends on the business model.
The costs of a license for a banking or financial service range from EUR 2,000.00 to 20,000.00 depending on the specific business model.
Among other things the resources needed for business operations, in particular sufficient initial capital consisting of Common Equity Tier 1 capital, are required to be available in Germany. In the case of investment or contract broking or portfolio management, where the service providers, in providing financial services, are not authorized to obtain ownership or possession of funds or securities of customers and who do not trade in financial instruments for their own account: an amount equivalent to at least EUR 50,000.00.
Platforms which conduct banking or financial services in the form of deposit business, portolio management or contract broking have to fulfill the funds requirements according to Art. 92 and following of Regulation (EU) 575/2013 (CRR) at all times. These are: a Common Equity Tier 1 capital ratio of 4.5%, a Tier 1 capital ratio of 6% and a total capital ratio of 8%. When calculating the capital ratios, the fixed overheads of the respective asset manager play an important role.
There are no reliable economic data as of yet.
In order to provide bitcoin services in a cost effective way in which also all legal requirements are complied with a cooperation with a fronting bank is recommended.