Germany: fintech & payments regulation

Who regulates

• Federal Financial Supervisory Authority (BaFin)

  Primary supervisor for credit institutions, financial services, insurance, and crypto custody authorization.

  ^{[1][2][3][4][5]}

• Deutsche Bundesbank

  Operational supervisor for payment institutions, e-money institutions, and securities firms; handles reporting and data collection.

  ^{[6][7][8][9][10][11]}

Core laws & rules

• German Banking Act (KWG) (2020 (revised text))

  Establishes the legal framework for authorization, supervision, and conduct of credit institutions and financial service providers, including crypto custody business.

  ^[1][2][3][5]

• Payment Services Supervision Act (ZAG) (2022 (notification/reporting overview))

  Regulates payment institutions and e-money institutions, detailing notification and reporting obligations.

  ^[6][9][10]

• Securities Trading Act (WpIG) (2023 (guideline))

  Governs the authorization and provision of securities services, including classification of securities firms.

  ^[7][8]

Licensing & registration

• Credit Institution

  Authorization required for credit institutions, with detailed application procedures and business plan requirements.

  ^[4]

• Payment/E-money Institution

  Authorization and notification required under ZAG, with specific reporting obligations to the Bundesbank.

  ^[6][9][10]

• Crypto Custody

  Provisional authorization granted under Section 64y KWG for crypto custody business, requiring notification and complete authorization application. Timeline: Notification by 31 March 2020 for provisional authorization

  ^[2][3]

• Securities Services

  Authorization required under WpIG for securities services, with classification into Large, Medium, and Small firms.

  ^[7][8]

• Financial Services (Section 32 KWG)

  Prior written authorization required for commercial financial service providers, covering twelve regulated services.

  ^[5][11]

Restrictions & warnings

• Foreign entities targeting the German market must secure a license under Section 32(1) KWG, typically through a subsidiary or branch.

  ^[12]

• Payment institutions must notify intent to appoint agents using specific data collection forms provided by the Bundesbank.

  ^[10]

Direction of travel

• Regulatory focus remains on clarifying statutory definitions and authorization processes, with ongoing guidance on crypto assets and securities services.

  ^[6][7][13]

Sources

1. Banking Act (Gesetz über das Kreditwesen) · 2020-04-02
2. Guidance on Interpreting Section 64y of the KWG · 2020-03-19
3. Guidelines on the Statutory Definition of Crypto Custody Business under Section 1(1a) Sentence 2 No. 6 of the German Banking Act KWG · 2020-03-02
4. Checklist: Authorisation as a credit institution · 2017-07-20
5. Notice on the Granting of Authorisation to Provide Financial Services under Section 32(1) of the German Banking Act · 2016-11-18
6. Guideline on the Preparation of Monthly Statements under Section 29 Paragraph 1 of the Payment Services Supervision Act (ZAG) · 2026-01-31
7. Guideline on the Granting of Authorization for Providing Securities Services under Section 15 WpIG · 2025-01-27
8. Classification System for Securities Firms and Financial Service Institutions · 2023-03-01
9. Overview of Notification and Reporting Requirements under the Payment Services Supervision Act (ZAG) · 2022-02-01
10. Data Collection Form for Intent Notification pursuant to Section 25(1) ZAG in conjunction with Section 7 ZAGAnzV (Agent Notification) · 2020-08-28
11. Notice on the granting of authorisation to provide financial services pursuant to section 32 (1) of the German Banking Act · 2016-11-18
12. Notes on Licensing for Cross-Border Banking Business and Financial Services in Germany · 2005-04-05
13. Statutory Definition of Multilateral Trading Facility Operations Under the German Banking Act (KWG) · 2023-05-16