Proposed Regulation by the Commission for Regulating Certain Matters
Germany has taken a significant step forward in the regulation of cryptocurrencies with the implementation of the Markets in Crypto Assets (MiCA) regulation. The European Union decided on MiCA in 2023, and it came into effect in some areas in 2024.
The German government had an advantage due to the existence of the Crypto Markets Supervision Act, which allowed for easy integration of certain provisions found in MiCA into the existing national legal framework. This swift action has paved the way for a more streamlined regulatory environment for cryptocurrencies in Germany.
The interest in cryptocurrencies among Germans has been on the rise. Over 10% of the population has already invested in cryptocurrencies, and a quarter are considering making their first investment. The age group of 30 to 49-year-olds is particularly open-minded about cryptocurrencies.
Banks in Germany now have the opportunity to offer regulated crypto products, thanks to the MiCA regulation. The established compliance departments and regulatory experience of banks have made it easier for them to implement MiCA requirements.
The MiCA regulation has created new requirements for decentralized finance (DeFi) transactions. Users are now required to provide an overview of transactions and value their holdings based on daily market prices. Over 80% of crypto exchanges have tightened their Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures under MiCA.
Stablecoin issuers are required to prove their full reserves under MiCA. E-Money Tokens (EMTs), Stablecoins, and Asset Referenced Tokens (ARTs) have been subject to MiCA regulation since mid-2024. The Federal Ministry of Finance has differentiated between active and passive staking.
The German financial regulatory authority, BaFin, has issued more than 400 licenses to crypto service providers by mid-2025 under the MiCA regulation. By the end of 2025, crypto service providers in Germany must have completed full MiCA licensing.
The transition periods for DeFi transactions apply for the tax year 2024, but the rules must be fully implemented by the tax year 2025. The MiCA regulation extends to decentralized finance (DeFi) applications, with initial guidelines for transparency and reporting obligations.
This regulatory push has led to a significant increase in partnerships with banks under MiCA. The lack of country-specific special regulations for MiCA allows for European passporting of services, making it easier for crypto service providers to operate across the European Union.
By legally defining the term "crypto-asset" since March 2025, Germany is setting a clear path for the future of cryptocurrencies within its borders. The implementation of MiCA regulation is a significant step towards creating a secure and transparent crypto market in Germany.
