Cryptocurrency Adoption Is Surging in Germany

Cryptocurrency adoption is gaining momentum in Germany, particularly among younger investors, while the UK continues to trail behind, partly because of slower regulatory progress, according to CoinShares crypto researcher Luke Nolan. Nolan said Germany is making “very good progress” in crypto adoption through “family offices, wealth managers, individual advisors” as well as younger generations seeking to allocate inherited wealth to digital assets.

By comparison, Nolan described the UK as “still very much behind,” pointing out that the Financial Conduct Authority (FCA) lifted its restrictions on crypto exchange-traded products for retail investors less than a year ago. He characterized the country’s digital asset market as “nascent.” The FCA had originally prohibited retail access to these products in January 2021.

Germany builds lead in European crypto adoption

Germany currently has 89 licensed crypto-asset service providers, representing 25.5% of all companies included in the European Securities and Markets Authority’s (ESMA) Markets in Crypto-Assets (MiCA) register. The EU’s largest economy was already leading the bloc in MiCA authorizations in June, when it had 57 authorized crypto companies, indicating continued growth in the country’s regulated digital asset sector.

Major German financial institutions are also becoming increasingly involved in the industry. Deutsche Bank revealed on Wednesday that it was awaiting regulatory approval to introduce crypto custody services for institutional clients across Europe, with a license expected in October.

Landesbank Baden-Württemberg, Germany’s largest federal bank, also entered the sector in April 2024 by offering cryptocurrency custody services through a partnership with Austria-based Bitpanda and its institutional custody platform.

UK prepares for new crypto regulatory regime

The UK, meanwhile, is continuing to develop its regulatory framework for digital assets. The FCA published final guidance clarifying when crypto-related activities may require authorization under the country’s upcoming regime. Licensing applications open on Sept. 30, with firms seeking transitional arrangements required to apply by Feb. 28, 2027. The new regulatory framework is expected to take effect on Oct. 25, 2027.

The FCA also announced on Thursday that it had issued cease-and-desist letters to three locations in London suspected of facilitating illegal peer-to-peer cryptocurrency trading. The UK Parliament approved regulations bringing digital assets within the FCA’s regulatory scope in February, followed by the completion of a broader package of rules and guidance in June.

Sources:

https://cointelegraph.com/news/crypto-adoption-blooming-germany-uk-behind-researcher

https://content.govdelivery.com/accounts/UKFCA/bulletins/42b2821

https://www.fca.org.uk/firms/new-regime-cryptoasset-regulation

https://x.com/Cointelegraph/status/2100495259012907128