German financial officials drew a clear framework for the legal status of cryptocurrencies, especially Bitcoin. Accordingly, cryptocurrencies have been identified as financial instruments in Germany.
The German Federal Financial Supervision Authority (BaFin) has defined cryptocurrencies as financial instruments and clarified regulations. These disclosures also created relief for those who used cryptocurrencies in their spending or invested in them.
According to BaFin’s press release on March 2 ; Cryptocurrencies are now classified as “digital representations of value” with the following features:
Not regulated or guaranteed by any central bank or public institution,
Does not have legal monetary status,
Can be used by individuals or legal entities as a means of exchange and payment,
Can be used for investment purposes,
Can be transferred, stored or traded electronically
The report also stated that cryptocurrencies should not be confused with electronic money that is subject to different laws in the law.
This new classification for cryptocurrencies is based on definitions written by other regulators worldwide, such as the Financial Action Task Force. BaFin also informed that cryptocurrencies were not included in any of the categories previously identified in Germany.