The adoption of blockchain technology and asset tokenization is advancing at a rapid pace, but the real engine driving its global development is the existence of a clear, consistent and innovation-friendly legal framework.
Some countries have already established themselves as regulatory benchmarks, establishing specific rules for cryptoassets, DLT infrastructures and the issuance of legally backed tokens. In this article we show you relevant information about blockchain regulation in Germany, which you can use as a guide if you are looking to operate internationally or evaluate different strategic locations.
Current legislation on blockchain and virtual assets in Germany
MiCA Regulation (Markets in Crypto-Assets Regulation)
Establishes the EU’s first comprehensive legal framework for regulating cryptoasset issuers and service providers (CASPs). Covers stablecoins, utility tokens, electronic money tokens (EMTs), asset referenced tokens (ARTs), and custody or exchange platforms. Requires prior authorization, governance requirements, solvency, transparency, and user protection.
MiFID II (Markets in Financial Instruments Directive II)
It is a European regulation that applies fully in Germany through the Banking Act (KWG). It establishes rules on transparency, investor protection and the functioning of financial markets. When cryptoassets are classified as financial instruments, its application is triggered. Companies advising, trading or brokering tokens must comply with its requirements. BaFin supervises their compliance, ensuring legal certainty in the tokenization environment.
German Banking Act (KWG)
Regulates financial and banking activities in Germany, including cryptoasset service providers. Cryptoassets are classified as financial instruments under this law. This means that any company offering custody, exchange or trading services for cryptoassets needs prior authorization from the Federal Financial Supervisory Authority (BaFin). The KWG also defines capital and governance requirements for these entities.
Electronic Securities Act (eWpG)
It allows the issuance of securities without the need for physical documents. This law greatly facilitates the tokenization of bonds, shares and other financial instruments on blockchain. The registration of these securities can be carried out in DLT infrastructures authorized by BaFin, eliminating intermediaries and increasing efficiency. The eWpG represents a key milestone in the digitalization of the German financial system. Its legal framework allows for greater innovation and legal certainty in the issuance of tokenized assets.
Cryptoasset Sandbox and DLT Pilot Regime in Germany
Germany is actively participating in the EU-approved DLT-based Market Infrastructure Pilot Regime. This regime allows fintech companies and financial institutions to operate tokenized securities trading and settlement platforms under temporary and controlled regulatory conditions. Germany has issued multiple authorizations under this regime through BaFin, favoring innovative trials in blockchain-based secondary markets.
Tokenization makes it possible to digitally represent real-world assets via blockchain, but for it to have legal value, a regulatory framework recognizing this operation is essential. Germany adopts its own approach, establishing specific rules for the issuance, custody or trading of tokens. In this block we explain how asset tokenization is regulated from a legal point of view, taking an advanced jurisdiction such as Germany as an example.
Regulation of asset tokenization in Germany
The regulation of asset tokenization in Germany is one of the most advanced and comprehensive in Europe in 2025, combining robust national frameworks with the integration of the European MiCA regulation. Since the entry into force of the Electronic Securities Act (eWpG) in 2021, Germany allows the issuance and registration of securities in digital format on blockchain, eliminating the need for paper certificates and facilitating the tokenization of traditional financial instruments such as bonds, stocks and fund shares. In December 2023, the Future Finance Act (ZuFinG) further extended this framework, allowing the tokenization of shares of German stock corporations (AktienGesellschaft), under the supervision of BaFin, the national financial authority.
BaFin evaluates each project to determine whether the tokens constitute financial instruments, securities or equity investments, applying the Securities Market Law, the Electronic Securities Law and the Capital Investment Law, as applicable.
The regulation requires issuers to publish detailed documentation on the tokens, their risks and conditions of issuance, and to comply with strict requirements for authorization, capital and anti-money laundering measures. To protect investors, there are safeguards for the safe custody of assets and mandatory insurance against financial loss.
Federal Financial Supervisory Authority (BaFin)
BaFin is the regulatory body that oversees cryptoasset service providers (CASPs) in Germany under MiCA. It requires specific licenses for exchanges, custodians and token issuers. It oversees whitepapers of STOs to ensure transparency and investor protection. It also monitors liquidity reserves, especially in stablecoins and asset-linked tokens. In 2025, BaFin leads the issuance of crypto licenses in Europe with 36% of the total.
German Central Bank (Bundesbank)
The Bundesbank promotes the development of the digital euro and regulates systemically relevant stablecoins. It participates in pilot tests with the ECB on offline payments and DLT settlement for wholesale financial transactions. Develops solutions such as the Trigger Solution to integrate blockchain with central bank money. Planned for 2028-2029, the introduction of the digital euro already has advanced technical tests. It also monitors the impact on financial stability and European integration.
BMWK (Federal Ministry of Economics and Climate Protection)
BMWK leads the Blockchain Strategy 2025 in Germany, with an investment of €2 billion in Web3 innovation, DeFi and asset tokenization. It fosters partnerships between startups, technology and the financial sector to apply blockchain to the real economy. It supports the use of open standards and the creation of regulatory sandboxes for controlled testing. Its goal is to position Germany as a leading hub for blockchain innovation.
DLT Pilot Regime Committee
The DLT Pilot Committee is a group coordinated by BaFin, Bundesbank and ESMA that oversees experimental projects with blockchain technology in financial markets. It evaluates and authorizes platforms for issuing, trading and settling tokenized securities under a flexible European regime. It allows regulatory exemptions to foster innovation without losing legal certainty and investor protection. By 2025, it manages 15 active projects in Germany. This initiative reinforces the country’s leadership in DLT-based financial infrastructure.
Launching a business based on digital assets requires more than just technology: it is also necessary to comply with legal requirements such as licensing, registration and regulatory obligations. These conditions ensure that the business model is viable and sustainable over time, and that it meets transparency and fraud prevention standards. In this section we explore which licenses are typically required and which compliance criteria blockchain companies operating in Germany must follow.
What licenses and requirements are needed to trade cryptoassets in Germany?
CASP License (MiCA)
The CASP license is mandatory under the MiCA Regulation for exchanges, custodians and issuers of ART and EMT tokens operating in Germany or the EU. It is issued by BaFin and enables European passporting, operating across the Union with a single authorization. It requires financial solvency, effective governance and regulatory compliance. It is the main gateway to legally operate cryptoassets in Europe.
Cryptoasset Custody License (KWG §1a)
Companies holding cryptoassets in custody must obtain this license according to the German Banking Act (KWG). Applies to both German and foreign companies serving customers in Germany. It requires minimum capital, qualified managers and liability insurance. It also requires business continuity plans and robust risk management systems. It is granted and supervised by BaFin as part of the national pre-MiCA regime.
Investment Company License
If a German platform offers crypto derivatives (such as futures, options, CFDs or other financial products whose underlying is a cryptocurrency), those products are considered financial instruments under European and German law. Therefore, the trader needs an investment firm license under MiFID II to be able to offer them legally.
AML/KYC Compliance
All crypto companies in Germany must comply with the Money Laundering Prevention Act (GwG). This includes applying KYC processes, transaction monitoring, beneficial ownership detection and suspicious activity reporting. BaFin monitors compliance as an essential condition for licensing. The AML/KYC framework seeks to protect the financial system and prevent its use for illicit purposes. Compliance is mandatory and ongoing for all CASPs.
Other regulatory requirements
Crypto companies in Germany must comply with the DORA Regulation, in addition to minimum capital requirements and annual technical audits. DORA requires ICT risk management systems, cybersecurity, business continuity and regular digital resilience testing. It also mandates oversight of external technology providers and staff training in digital security. Compliance with DORA is mandatory to maintain the MiCA license.
Are you exploring developing your blockchain project in Germany?
At Metlabs we help companies like yours and offer comprehensive support in the development of blockchain projects and tokenization of assets such as real estate, carbon credits, commodities, intellectual property, financial instruments, franchises and more, fully aligned with blockchain regulation in Germany and international regulatory standards.
Contact us and find out how we can help you meeting all your business model needs, from technical validation and structuring to design, development and implementation of custom blockchain solutions, ready to scale from day one.