BaFin/MiCA CASP Licence in Germany

Crypto Regulation in Germany

Germany was the first EU country to explicitly regulate crypto assets in 2020. The crypto custody license under the German Banking Act (KWG) made Germany a pioneer in the EU. With MiCA (Markets in Crypto-Assets), a unified European framework is now being implemented.

License Types Overview

1. Crypto Custody License (§1 (1a) KWG)

Crypto custody encompasses the safekeeping, management, and protection of crypto assets or private cryptographic keys for third parties. This license is required for:

• Custody providers (customer wallets)
• Crypto exchanges (for custody of customer assets)
• Institutional custodians
• Token issuers with custody function

Requirement	Details
Capital	Min. €125,000
Legal Form	Corporation (GmbH, AG)
Location	Germany (head office)
Managers	Min. 2 reliable, qualified persons
Decision Timeline	25 + 40 working days after completeness (Art. 63 MiCAR, suspendable by up to 20)

2. MiCA-CASP Authorization

The MiCA Regulation (Markets in Crypto-Assets Regulation) creates a unified EU legal framework for crypto-asset service providers (CASP).

Timeline	Event
June 2023	MiCA entered into force
June 2024	Stablecoin rules apply
December 2024	CASP rules fully applicable
31 December 2025	End of Germany's national transitional regime (§ 50 KMAG) — existing providers need MiCA-CASP authorisation

MiCA Own-Funds Classes (Annex IV MiCAR)

Class	Services	Minimum Capital
Class 1	Reception/transmission, advice, execution and placing of orders	€50,000
Class 2	additionally custody/administration and exchange of crypto-assets	€125,000
Class 3	additionally operating a trading platform	€150,000

Own funds must always equal the higher of the stated minimum capital or one quarter of the previous year's fixed overheads (Art. 67 MiCAR).

MiCA-CASP Services

• Custody and administration of crypto-assets
• Operation of a trading platform
• Exchange of crypto-assets for funds or other crypto-assets
• Execution of orders on behalf of clients
• Placing of crypto-assets
• Reception and transmission of orders
• Advice on crypto-assets
• Portfolio management
• Transfer services

3. Other License Types

License Type	Description	Capital
Financial Commission	Trading in own name for account of others	€730,000
Proprietary Trading	Trading for own account	€730,000
Multilateral Trading Facility	Operating a trading platform	€730,000
E-Money License	For stablecoin issuers	€350,000

BaFin Application Process

Phase 1: Preparation (2-4 months)

• Business model analysis and license selection
• Company formation (if required)
• Creation of business plan
• Building organizational structure
• Development of compliance policies
• IT security concept

Phase 2: Application Filing

• Submission of application documents to BaFin
• Proof of capital
• Reliability check of managers
• Demonstrate professional qualification
• Organizational chart and personnel structure
• AML/KYC concept

Phase 3: Review (statutory MiCA decision timeline)

• Formal review of documents by BaFin
• Queries and additional requests
• Potentially on-site inspection
• Coordination with other authorities
• Granting or rejection of license

Requirements in Detail

Management

• Number: At least 2 persons
• Reliability: No relevant criminal convictions
• Qualification: Knowledge in financial services, crypto, IT
• Accessibility: Reachable from Germany

Organizational Requirements

• Business Organization: Clear structures and responsibilities
• Risk Management: Appropriate risk control
• Compliance: Compliance function and money laundering officer
• Internal Audit: For larger companies
• Outsourcing: Controlled outsourcing of functions

IT Security

• Cybersecurity: Protection against hacker attacks
• Cold Storage: Secure offline custody
• Key Management: Secure key administration
• Disaster Recovery: Emergency planning
• Audit Trail: Traceable transactions

AML/KYC Compliance

• Customer Identification: KYC procedures
• Transaction Monitoring: Detect suspicious activities
• Reporting Obligations: Suspicious activity reports to FIU
• Sanctions Screening: Real-time screening
• Travel Rule: Information exchange for transfers

Costs of a BaFin License

Cost Type	Amount
BaFin Fees	€10,000 - 50,000
Legal Advisory	€50,000 - 150,000
Compliance Consulting	€30,000 - 100,000
IT Infrastructure	€50,000 - 200,000
Capital	€125,000 - 730,000
Ongoing Costs (annual)	€100,000 - 500,000

Advantages of a German Crypto License

• EU Pioneer: Germany has the longest experience with crypto regulation
• Legal Certainty: Clear regulatory framework
• MiCA Passporting: Access to the entire EU market
• Credibility: German license enjoys international reputation
• Banking Access: Easier access to banking services
• Institutional Clients: Attractive to institutional investors

Alternatives and Transitional Solutions

Registration Instead of License

Certain crypto services do not require a full license but only registration. BaFin assesses this on a case-by-case basis.

Transitional Arrangements (expired)

Germany's national transitional regime for existing providers expired on 31 December 2025 (§ 50 KMAG). Continuing to operate solely on the basis of a former KWG crypto custody licence is no longer possible — the transitional route into MiCA authorisation is closed. New entrants need MiCA-CASP authorisation before providing services.

Other EU Countries

With a MiCA license from another EU country (e.g., Lithuania, Malta), you can also operate in Germany. However, substance and supervisory requirements must be met in the home country.