FinmadiG: Law holds crypto service providers accountable

Stricter obligations in the areas of identity verification and transaction monitoring

One of the key changes affects the expansion of due diligence obligations, particularly in the area of identity verification. KYC (Know Your Customer) is becoming even more important and the documentation requirements are increasing. CASPs must ensure that all customers are comprehensively verified, including the identification of beneficial owners in complex corporate structures.

In addition, transaction monitoring is being intensified: suspicious transactions must not only be reported, but also analyzed and documented in greater detail.

Increased effort for CASPs: lower thresholds and extended transparency obligations

The FinmadiG attaches great importance to the traceability of transactions. CASPs are obliged to design all transactions in such a way that they can be clearly traced from origin to destination. This often requires investments in new technologies such as blockchain analysis tools and the adaptation of internal control systems (ICS).

In addition, the thresholds for reporting suspicious transactions have been lowered, which will lead to a higher number of reports. CASPs must be prepared to scale their internal processes accordingly.

Stricter regulation as a confidence booster for customers and investors?

Although the new regulations entail increased administrative effort, they also offer opportunities: solid money laundering prevention strengthens the trust of customers and investors and positions providers as trustworthy players in the market.

Companies that act proactively and adapt at an early stage can minimize regulatory risks and gain competitive advantages.

Crypto law as a stepping stone for the further professionalization of the crypto market

The FinmadiG marks a further step towards the crypto market’s professionalization and regulation. CASPs should take the opportunity to review their compliance strategy and align their processes with the new requirements.

The focus on transparency, diligence and traceability is not only a regulatory must, but also an opportunity to sustainably strengthen trust in cryptocurrencies and digital assets.

Crypto Act serves to transpose the European MiCA Regulation into national law

The new Financial Market Digitization Act, which was passed by the German Bundestag at the end of 2024, will transpose the European Markets in Crypto Assets (MiCA) Regulation (2023/1114) into national law. Among other things, the FinmadiG will create a new law on the supervision of markets for crypto assets (Crypto Markets Supervision Act - KMAG). Furthermore, several existing laws will be amended. This will affect the responsibilities and powers of the German Federal Financial Supervisory Authority (BaFin) and the sanctioning of violations of the EU regulation.

Since December 30, 2024, the provisions of the FinmadiG have covered all companies that provide services in the field of crypto assets – from consulting and transfer services to the custody of crypto assets. In addition to pure crypto exchanges, the law also holds established banks and neo-brokers liable if they offer corresponding services.

From KYC and ICS to blockchain analysis tools: We make crypto service providers fit for FinmadiG

Baker Tilly supports you in implementing the new requirements of FinmadiG. From reviewing your KYC processes and optimizing your internal control systems to implementing blockchain analysis tools, we offer practical solutions to strengthen your compliance and minimize regulatory risks. Contact us in order to learn more about our services.