Regulatory Framework for Fintech Companies in Germany

Regulation of Cryptoassets

The German Federal Financial Supervisory Authority (BaFin) has amended regulations allowing special Alternative Investment Funds (AIFs) to invest up to 20% of their total assets in cryptoassets.

Peer-to-Peer and Marketplace Lending

• Lenders: BaFin assesses on a case-by-case basis whether investors are conducting lending or deposit business on a scale that requires licensing.
• P2P Platform Operators: Licensing requirements depend on the actual services provided, but platforms may need to obtain an authorisation under the German Industrial Code.

Crowdfunding

• BaFin’s Crowdfunding Models:
  • Donation-based
  • Rewards-based
  • Loan-based
  • Equity-based
• The EU Crowdfunding Regulation is directly applicable law in Germany, requiring operators of crowdfunding platforms to obtain a licence.

Other Fintech Services

• Invoice Trading: Generally not regulated, but factoring activities may require a financial services licence.
• Payment Services: Regulated under PSD2, requiring written authorisation from BaFin for commercial or scale-based payment services.
• Open Banking: No specific regulations promote competition and require customer or product data to be made available to third parties.
• Insurance Products: Fintech companies selling or marketing insurance products in Germany are likely to be regulated by BaFin if they conduct insurance business, or the local chamber of industry and commerce if they act as brokers.
• Credit References: Credit information services may be subject to Regulation (EC) No. 1060/2009 (Credit Rating Agency), depending on their classification.

Purpose of Regulations

These regulations aim to ensure that fintech companies operating in Germany comply with financial laws and regulations, protecting consumers and maintaining market stability.