If you’re part of a Bitcoin-related company operating in Europe, you might want to take a look at the subtle statement issued by the German Federal Financial Supervisory Authority (BaFin) in December 2011, a document whose existence a lot of people ignore. The document directly concerns only Bitcoin businesses domiciled in Germany, but since BaFin is one of the most important and recognized regulatory institutions in the European Union, all crypto-businesses in Europe should consult it.
Back in 2011 Bitcoin was already important, at least for the super powerful Germans. So they didn’t expect for people to start working with the coin, they got ahead and integrated some guidelines in the German Payment Services Supervision Act, one of the codes that transfers the EU Payment Services Directive into the German law.
Refusing to consider Bitcoin as e-money, BaFin refers to the cryptocurrency as a “unit of value” (a term without legal meaning) and not “unit of account”, a technical term from the field of finance law.
BaFin is clearly cautious when talking about Bitcoin, stating that the “creation” (what we call mining) of Bitcoins and their “use as a medium of payment” do not need a license. However, the same regulation that is applicable to banks and financial services could be also applicable to Bitcoin transactions under two conditions. The first one claims that this can happen if Bitcoins become an “object of trade” and the second one means that the rules are applicable if the “structure of the transaction” justifies doing so. If these two criteria are met, Bitcoins become “units of account” and, therefore, financial instruments.
Sure, the rules can be quite pliable at this point, since we’re not even using technical terms that are part of the regulatory system. In this case, BaFin clearly doesn’t agree with some of the other opinions out there regarding cryptocurrency, but the rules aren’t written in stone yet, anyway.
There’s not a lot of conclusive information for now, but it doesn’t hurt to take a look at the non-official guidelines that come from the experts and, most importantly, from the authorities. Better safe than sorry!