Germany's Crypto Garden Is Blooming While the UK Is Still Watering the Lawn 🌱

Cryptocurrency adoption is accelerating in Germany, while the United Kingdom risks falling behind because of regulatory delays, according to CoinShares crypto researcher Luke Nolan. Speaking on Cointelegraph's Chain Reaction show on Thursday, Nolan said German adoption is showing "very good progress" through "family offices, wealth managers, individual advisors" and a younger generation channeling inherited wealth into digital assets. He described the UK as "still very much behind," noting that the country's Financial Conduct Authority only lifted its ban on crypto exchange-traded products less than a year ago, leaving the market "nascent." The FCA had barred those products from retail participants in January 2021.

Germany's regulatory footprint underscores the lead. The country has 89 licensed crypto-asset service providers, accounting for 25.5% of companies on the European Securities and Markets Authority's Markets in Crypto Assets (MiCA) register, updated on Wednesday. The EU's largest economy also led the bloc in MiCA authorizations in June, with 57 authorized crypto firms.

Major institutions are moving to match the demand. Deutsche Bank, Germany's largest bank, said on Wednesday it is awaiting regulatory approval to launch crypto custody services for institutional clients in Europe, with a license expected in October. In April 2024, Landesbank Baden-Württemberg, Germany's largest federal bank, began offering crypto custody after partnering with Austria-based Bitpanda for its institutional custody platform.

UK regulators are still laying the groundwork. On Wednesday, the FCA published final guidance on when crypto activities may require authorization under the country's incoming regulatory regime. The regulator will open licensing applications on Sept. 30, with a Feb. 28, 2027 deadline for firms seeking transitional arrangements before the new regime takes effect on Oct. 25, 2027. The UK Parliament approved legislation bringing digital assets within the FCA's remit in February, and the regulator finalized its package of rules and guidance in June. On Thursday, the FCA said it sent a cease-and-desist letter to three London locations suspected of facilitating illegal peer-to-peer crypto trading.