Plenum Approves Financial Market Modernization Act
wf Berlin
Parliament passes new cryptocurrency oversight legislation
Before the year's end, the Bundestag enacted new regulations for crypto markets oversight. The Financial Market Modernization Act (FinMMA) marks the implementation of the EU directive Mica (Markets in Crypto Assets) just in time, following a last-minute addition to the parliamentary agenda. The bill had been stalled in the traffic light coalition dispute, despite initial CDU/CSU support.
"After eight months of procrastination by the traffic light coalition, the time has finally come," stated Union rapporteur Johannes Steiniger to the Börsen-Zeitung. "Unfortunately, the financial toll on the industry from this delay is massive. For the next legislative period, we need innovation and speed, not more delay." The Bundestag's Finance Committee approved the bill in April. The industry had demanded an implementation act as Germany lagged behind other EU nations in competitiveness. Moreover, BaFin (the Federal Financial Supervisory Authority) was lacking the necessary powers and competencies it now receives. It can now also punish breaches of EU regulation.
Regulations Consolidated
The FinMMA includes the creation of a new Cryptomarket Supervision Act in Germany. For the federal government, consolidating national regulations for cryptocurrency market oversight into one law results in both legal and administrative simplification.
A portion of the EU regulations takes effect immediately through the directive, focusing on the requirement for tracking financial transactions, including those involving cryptocurrencies. The measures against financial crime, money laundering, and terrorist financing are expanded to cover cryptocurrencies. The legislation package also incorporates the European Digital Operational Resilience Act (DORA). This aims to bolster the operational resilience of financial companies in the digital age, with requirements for advanced IT security, reporting obligations during serious security incidents, and more.
The vzbv Federation of German Consumer Organizations applauded the increased influence of the Consumer Council at BaFin. Under the new law, BaFin must consult the council more frequently on consumer protection matters. Christian Ahlers, a consultant in the vzbv finance team, explains, "This enhances overall consumer protection at BaFin." The association continues to advocate for a dedicated business unit with sufficient staff for the council.
Insight:
This legislative development is part of broader digitalization efforts in Germany, as outlined in the new coalition agreement emphasizing streamlined regulations, improved infrastructure, and technological sovereignty. The new digital ministry is also being established to fortify Germany's digital economy. The government aims to invest in AI and digital technologies to establish Germany as a leading center for technological advancements.
Meanwhile, the EU's Digital Operational Resilience Act (DORA) introduces uniform cybersecurity standards for financial institutions across the EU, including those in Germany. This regulation aims to strengthen operational stability in the EU financial system by enforcing ICT risk management and security audits.
Although there is no specific mention of regulations directly affecting cryptocurrency markets in the provided search results, any broader digitalization initiatives could potentially impact this sector. The focus on simplifying data protection standards and promoting centralized oversight may also strengthen consumer protection. However, it is unclear whether the FinMMA provides BaFin with more powers or changes in its regulatory scope. For specific insights regarding these aspects, further research or specific legislation is necessary.
In light of the approval of the Financial Market Modernization Act (FinMMA) and the EU directive Mica, Germany's business sector, particularly the finance and technology industries, may now experience legislative streamlining, focusing on cryptocurrency market oversight, enhancing consumer protection, and promoting operational resilience in the digital age. Additionally, with the incorporation of the European Digital Operational Resilience Act (DORA) in the legislation package, financial institutions, including those in Germany, will have to adhere to uniform cybersecurity standards, potentially impacting the cryptocurrency market sector.
