The Green Party and the economic-liberal FDP gained momentum in the 2021 federal elections, guaranteeing a governmental seat in the following parliamentary year for the first time since 2005 and 2013. Olaf Scholz, who previously served as vice-chancellor and finance minister, is expected to succeed Angela Merkel after four mandates.
The three soon-to-be ruling parties include digital financial services and currencies in their coalition agreement, published on Wednesday. The alliance wants Germany to be a hub for “FinTechs, InsurTechs, platforms, NeoBrokers, and all other idea generators”:
It is important to take advantage of the opportunities associated with new technologies, such as blockchain, identify risks, and create an appropriate regulatory framework. We will therefore ensure effective and swift approval procedures for FinTechs.
Furthermore, the alliance intends to assist the EU in adopting a digital Euro as a complementary payment mechanism to cash and pledges to collaborate closely with the EU in developing a legislative framework for cryptocurrency:
We need a new dynamic towards the opportunities and risks from new financial innovations, cryptoassets and business models. We advocate for a level playing field within the EU, between traditional and innovative business models.
While this appears to be pro-crypto at first look, Scholz had a mixed relationship with crypto assets throughout his tenure as finance minister. The finance ministry co-authored a position paper for Germany’s “blockchain strategy” in 2019, which has so far fallen short of expectations. Scholz campaigned for AML regulations for self-custodial wallets earlier this year.
At the very least, the EU has just established a relatively lenient regulatory framework for the crypto industry, so these most severe measures to control crypto transactions appear to be off the table. BelgianPolitics, a Reddit member, remarked on the planned guideline, saying he was “pleasantly surprised.”
The EU intends to impose strict controls on custodians and centralized exchanges; however, the law excludes NFTs, utility tokens, airdrops, DeFi services, and self-custodial wallets.
Stablecoin issuers, in particular, will be scrutinized by regulators. However, it is unclear if this covers decentralized stablecoins. The document expressly indicates that algorithmic stablecoins “may” be regulated, implying that this is a matter for national legislators to determine.