Germany’s Federal Financial Supervisory Authority (BaFin) has been considering bitcoin as a financial instrument, till now. But, a subsequent court ruling disapproves the classification and states that the Bitcoins are not a financial instrument within the meaning of the German Banking Act.
Reportedly, the German enforcement had arrested the operator of a local bitcoin trading platform. Berlin-Tiergarten Local Court had sentenced the operator to a fine for conducting banking business and for providing financial services without the required BaFin permit. The Berlin Court of Appeal dismissed criminal proceeding against the operator, stating, BaFin misinterpreted the legal status of bitcoin.
The 4th Criminal Division of Berlin Court of Appeal favored the regional court’s ruling, affirmed that the German regulators extended the scope of criminal law to bitcoin without combining with the banking acts.
Regarding this, the appeal court claimed that Bitcoin is neither issued by a central bank nor by a public authority. The digital currency has an absence of general recognition and a stable value which could enable its use to compare goods or services. That’s why it cannot be considered as a financial instrument. Also, it fails to meet an essential requirement of units of account.
Additionally, the court ruled that “Bitcoin trading is not subjected to permits or licenses, and consequently – per Section 1(54) – was not a criminal offense. Due to these facts alone, BaFin couldn’t extend the scope of criminal penalties on the accused.”
Following the judgement, BaFin cannot penalize those who are holding or trading cryptocurrencies.
The judgment has increased the unpredictability as far as concerned to the approach to the bitcoin in European countries. Although, Individual countries in the Eurozone positioned the bitcoin a legal status in their jurisdictions.
On this subject, Jörg von Minckwitz, President of Bitwala which is a blockchain banking service in Germany, expressed that, each European country should get on the same page before writing the first bitcoin bill.
He added more, “In the past years, Bitwala has repeatedly spoken out in favor of legal clarity and a regulatory level playing field in the EU, as digitization affects society across borders, this can only be done in unison. Currently, every EU country seems to have their interpretation, which results in regulatory arbitrage to the detriment of German consumers and innovators.”