Is crypto legal in Germany? Regulation & rules (2026)

Germany chose a strict transition: crypto-asset service providers holding old KWG licenses had to obtain a MiCA CASP authorisation by year-end or cease operating, well ahead of the EU-wide 1 July 2026 backstop. By December 2025 BaFin had granted the most CASP licenses of any EU member state (around 27).

The EU Digital Operational Resilience Act, implemented in Germany via the FinmadiG, became applicable, imposing ICT risk-management, incident-reporting and governance requirements on crypto-asset service providers alongside other financial entities.

Parliament adopted the FinmadiG, whose centerpiece is the new Crypto Markets Supervision Act (KMAG) implementing MiCA and DORA into German law, defining BaFin's powers, sanctions and a grandfathering regime running to 31 December 2025.

The Bundesfinanzhof ruled that cryptocurrencies are 'other economic assets' and that profits from sales within a one-year holding period are taxable as private sales under the Income Tax Act, rejecting claims of an unconstitutional enforcement deficit. Gains after one year remain tax-free.

The KryptoFAV extended the Electronic Securities Act to allow investment fund units to be issued as crypto securities recorded on distributed ledgers, broadening tokenisation beyond debt instruments.

Germany enabled purely electronic securities without paper certificates, creating 'crypto securities' registered on DLT and making crypto-securities registry-keeping a BaFin-supervised financial service — a core part of the federal blockchain strategy.

BaFin published its guidance notice detailing the statutory definition of crypto custody business under section 1(1a) KWG and the requirements for the new licensing regime.

Implementing the EU's 5th Anti-Money-Laundering Directive, Germany added 'crypto assets' as a financial instrument and created a new crypto custody business requiring BaFin authorisation (minimum capital €150,000), making Germany an early mover in formally licensing crypto custodians.

The Cabinet approved a blockchain strategy across five fields of action, signaling support for the technology and tokenised securities while explicitly rejecting private stablecoins (e.g. Libra) as alternatives to sovereign currency. It set the agenda for the eWpG and crypto regulation.

In a published expert article, BaFin took the position that Bitcoin are 'units of account' and therefore financial instruments under section 1(11) KWG, meaning commercial trading could require authorisation — Germany's foundational regulatory stance on crypto.