Why Germany Loves Cryptocurrencies but Not DeFi?

Published on:

21 Apr 2022, 1:04 am

Every Country's crypto adoption point is assessed separately from the Quarterly Global Crypto Ranking report.

According to a report, Germany moved up three places on an annual basis and took the top spot as the most crypto-friendly country in the world. However, the country is not open to decentralized finance (DeFi). Every Country's crypto adoption point is assessed separately from the Quarterly Global Crypto Ranking report. Germany is one of those countries that recognize licensed cryptocurrency exchanges and wallet providers as part of the financial services industry, although there is no specific crypto use regulation. The German Banking Act also allows banks to have custody of crypto. All countries, including Germany, are scored out of 10 under eight different categories which make up the country's crypto rating. Germany recorded eight out of 10, or higher, in all categories except the DeFi acceptance category.

Germany and crypto

According to Gemini's 2022 Global State of Crypto report, 53% of Germans admit to being "crypto curious," while 43% of high-income Germans own crypto assets. Additionally, roughly 17% of all Germans own cryptocurrency. Germany's 46% female crypto adoption rate is also one of the highest in the world.

Germany's central bank is also open to crypto-assets and CBDCs; however, it is reluctant to deploy anything before sound regulations. Currently, cryptocurrencies are not considered legal tender in Germany. All crypto businesses must acquire authorization from Germany's Federal Financial Supervisory Authority (BaFin).

In June 2021, BaFin issued the first crypto custody business license for Coinbase. The regulator said due to lack of precedent it would be forming an interdisciplinary, cross-departmental team to handle all crypto-related issues.

What Is Decentralized Finance (DeFi)?

Decentralized finance (DeFi) is an emerging financial technology based on secure distributed ledgers similar to those used by cryptocurrencies. The system removes the control, banks and institutions have on money, financial products, and financial services.

Some of the key attractions of DeFi for many consumers are:

It eliminates the fees that banks and other financial companies charge for using their services.
You hold your money in a secure digital wallet instead of keeping it in a bank.
Anyone with an internet connection can use it without needing approval.
You can transfer funds in seconds or minutes.

Are Germans open to crypto?

Breaking down cryptocurrency ownership by income, ownership levels are significantly higher among the wealthy. 67% of the surveyed Germans have an annual income of over €800,000, 44% of them between €200,000 to €800,000, which is at least twice that of other income groups.