Germany's Crypto Start-Ups Must Balance Regulation and Innovation

For crypto start-ups in Germany, choosing the right legal form and obtaining the necessary licenses are crucial steps. According to MiCA, which regulates crypto-asset services in the EU, anyone holding or exchanging crypto-assets for others needs authorization from BaFin, the German financial regulator.

The minimum capital required for a BaFin license ranges from 50,000 to 150,000 euros, depending on the service provided. For example, operating a trading platform requires 150,000 euros in capital. BaFin also demands management that is both reliable and professionally qualified, as well as anti-money-laundering rules and IT security measures.

Those who need BaFin authorization typically start with a GmbH, as the minimum capital required by the supervisor exceeds that of a UG in any case. The formation process involves articles of association, commercial registration, and business registration. Those seeking to issue their own token must draw up a white paper and submit it to the supervisor.

For those outside the authorization requirement, such as offering software or analytics tools, a GmbH or UG is sufficient. On tax, gains on a sale are subject to corporation tax and trade tax, totaling around 30 percent depending on the municipality.