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Bitcoin – one foot in the door to Europe


The German Ministry of Finance hit the headlines with an official statement recognizing Bitcoin as unit of account thereby giving it the legitimacy to be used as a settlement currency in one of the world’s largest economies. After the official opinion issued by the US Treasury Department that I mentioned elsewhere, this is the second time a country has taken an official stance on Bitcoin.

To quote Matt Clinch (CNBC):

“Bitcoins is not classified as e-money or a foreign currency, the Finance Ministry said in a statement, but is rather a financial instrument under German banking rules. It is more akin to “private money” that can be used in “multilateral clearing circles””.

The decision will increase legal certainty and strengthen the role of the currency.  Furthermore, together with another development it may have far-reaching EU-wide consequences:

One German bank, Fidor Bank, has applied for a license from the German BaFin to operate a Bitcoin exchange in Germany. Fidor is an online bank which with its use of social media and its business model of “Banking with Friends” differs from traditional banks. As Dawn Cowie of FS magazine wrote:

Founded in 2009 in the middle of the financial crisis, Fidor has built an online banking community with about 160,000 users who offer peer-to-peer advice on saving, investment and everyday financial problems. What’s more, online users are also encouraged to come up with innovative ideas to develop and improve the bank’s products and services.”

In July 2013, Fidor formed a large-scale partnership with the German marketplace operator of It agreed to provide a ‘liability umbrella’ to Bitcoin Deutschland GmbH thereby enabling the marketplace to prove it is officially following financial market regulations, such as anti-money laundering legislation (CoinDesk).

At first glance, the Fidor application does not make sense. As Franz Nestler (FAZ) emphasizes, operating a Bitcoin exchange in Germany would require only registration. But, the move is not necessarily aimed at merely “being on the safe side”, as Nestler presumes. As Adrianne Jeffries (The Verge) rightly states, a BaFin license would allow the exchange to operate anywhere in the EU.

In this context, Adrianne Jeffries draws attention to an interesting article by Karl-Friedrich Lenz who compares the European and US systems:

“I have not studied American law on the point in detail, but I understand that you need to get a license as a “money transmitter” in 48 States to start a Bitcoin exchange. That is a significant regulatory burden. Essentially you need to tell 48 times the same story, and pay some lawyers to do that. This recent article at FoxNews titled “Could Bitcoin go legal” gives some interesting background on the cost involved for getting those licenses in the United States.

In contrast, if someone gets a “regulated market” licensed under the EU MIFID Directive, they need to deal only with the regulator of their own Member State. You don’t need to run around all the 27 Member States applying for licenses.”

The thought may be far-fetched that with the latest German Ministry of Finance decision Bitcoin could become an alternative to the euro if it ever ceased to exist, as Kathleen Brooks of is quoted by CNBC’s Matt Clinch.

However, with recent developments in Germany, Bitcoin’s importance is growing and its door to Europe is opening a little wider.


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