Jan, 18 2026
Operating a crypto exchange in Germany isn’t just about setting up a website and accepting Bitcoin. It’s a tightly controlled process governed by one of the strictest, most detailed regulatory systems in Europe. If you’re thinking about launching or using a crypto exchange in Germany, you need to understand the rules - not just the basics, but the real, working requirements that keep businesses running or shut down.
Who Controls Crypto in Germany?
The Federal Financial Supervisory Authority, known as BaFin, is the single gatekeeper for all crypto exchanges in Germany. BaFin doesn’t just give out licenses - it actively monitors, audits, and enforces compliance. In 2025, BaFin shut down Ethena GmbH’s operations in Germany over its USDe stablecoin offering, forcing users to redeem tokens through a government-appointed representative. That wasn’t a warning. It was a message: if you don’t follow the rules, you’re out.
Since December 30, 2024, Germany’s rules have been fully aligned with the EU’s Markets in Crypto-Assets Regulation (MiCAR). This isn’t optional. It’s mandatory. MiCAR didn’t replace German law - it layered on top of it. So now, every crypto exchange must comply with both national German laws and EU-wide standards. That means double the paperwork, double the scrutiny, but also access to the entire EU market once you’re approved.
You Need a BaFin License - No Exceptions
If your business involves trading, custody, or exchanging crypto assets in Germany, you need a formal license from BaFin. There are no gray areas. No "just testing". No "small operation" exemptions. Even if you’re based in Austria or Switzerland but serve German customers, you still need this license.
The application isn’t a form you fill out and mail in. It’s a multi-month process requiring detailed documentation on:
- Your company’s legal structure and ownership
- IT security systems - including encryption, cold storage, and breach response plans
- Anti-money laundering (AML) procedures
- Proof of sufficient capital reserves
- Clear descriptions of the crypto assets you plan to offer
BaFin also requires a white paper for any new crypto asset you want to list publicly. This isn’t a marketing brochure. It’s a technical and legal document that explains the asset’s purpose, risks, tokenomics, and governance. If it’s vague, incomplete, or misleading, BaFin will reject it - and you’ll have to start over.
Not All Crypto Assets Are Treated the Same
Germany doesn’t treat Bitcoin the same way it treats a token that promises dividends or profit-sharing. The classification system is strict:
- Financial instrument tokens - like tokenized stocks or bonds - fall under the German Securities Trading Act and MiFID II. You need a full investment firm license.
- Security-like tokens - those that represent ownership or claims on assets - require a prospectus approved under the German Securities Prospectus Act.
- Capital investment tokens - often used in fund structures - are regulated under the German Capital Investment Act.
Many exchanges make the mistake of lumping all tokens together. That’s a fast way to get fined or shut down. You must classify each asset you list. If you’re unsure, BaFin offers pre-application consultations - but they’re not free, and they don’t guarantee approval.
Anti-Money Laundering Rules Are Non-Negotiable
Germany’s Crypto Asset Transfer Regulation (KryptoWTransferV) enforces the FATF "travel rule" - and it’s enforced aggressively. Every crypto transfer over €1,000 must include originator and beneficiary information: full name, address, account number, and ID verification.
This isn’t just for large transfers. It applies to every transaction, even small ones, if they’re part of a pattern. Exchanges must collect KYC data on every user before they can trade. No anonymous wallets. No privacy coins unless they’re fully traceable under German law.
In 2025, BaFin fined two German-based exchanges for failing to verify user identities in over 12,000 transactions. The penalty? €4.7 million. That’s not a cost of doing business - it’s a warning.
What About Taxes? Yes, They’re Part of the Rules Too
On March 6, 2025, Germany’s Federal Ministry of Finance released new tax guidance that changed how crypto is treated for reporting. The key updates:
- Use daily market rates for all valuations - no averaging, no guessing.
- Active staking (running a validator node) is treated as income - taxed at your personal rate.
- Passive staking (using a platform like Kraken or Coinbase) is treated as capital gains - taxed at 25% plus solidarity surcharge.
- DeFi transactions - lending, borrowing, liquidity provision - now require individual tax reporting for the first time.
Exchanges must provide users with detailed transaction overviews by January 31 each year. If you don’t, your users can’t file taxes correctly - and you could be held liable.
Grandfathering: What About Existing Exchanges?
If you were operating legally in Germany before MiCAR took effect on December 29, 2024, you had until December 31, 2025, to transition to the new license. That deadline has now passed. Any exchange still operating under an old permit is technically unlicensed.
Some institutions - like banks or licensed investment firms - can offer limited crypto services without a new license, but only if they notify BaFin and comply with MiCAR rules. That’s not a loophole. It’s a narrow exception.
Any exchange that didn’t apply for a MiCAR-compliant license by January 1, 2026, is now operating illegally. BaFin is actively scanning for these operators. If you’re one of them, you’re at risk of immediate shutdown.
Why Germany’s System Is Both a Barrier and a Advantage
Yes, the rules are tough. But that’s also why German crypto exchanges are trusted globally. Investors know that a German-licensed exchange has passed strict audits, uses secure infrastructure, and follows transparent reporting. That’s worth more than any marketing slogan.
Germany also offers R&D grants for blockchain startups and has 90 double taxation treaties with other countries. That means if you’re a non-EU company setting up in Germany, you can reduce your global tax burden - if you comply.
The downside? Complexity. You need lawyers, compliance officers, and IT specialists who understand both German and EU law. One mistake in classification or reporting can cost you your license. But if you get it right, you gain access to 82 million consumers and the entire EU market - with credibility that no other country in Europe currently matches.
What Comes Next?
BaFin is already looking at decentralized finance (DeFi) protocols. The March 2025 tax circular was the first step - but enforcement is coming. Expect new rules for DAOs, automated market makers, and non-custodial wallets by mid-2026.
If you’re building a crypto business in Germany, don’t wait. Start your BaFin application now. Gather your documentation. Hire a compliance expert who’s handled MiCAR transitions before. The window for easy entry is closed. But the market is still wide open - for those who play by the rules.