Fintech Market Overview

This article does not constitute legal advice.

Smart contracts in Germany


The principle "same business, same risk, same regulation" is the guiding principle of both the German legislator and the BaFin, which is neutral when it comes to technology. Fintech companies may not be comparable with traditional financial sector entities, because German legislators and the BaFin have not created any restrictive regulations for these companies. At the moment there is no project in Germany where fintech companies can test their business models. Although in the UK and Switzerland this has long been a success.1

Bafin addresses pressing issues concerning the fintech sector, such as oversight and startup culture. All the necessary information about oversight in this project is available on BaFin's official website. 2

The EU Digital Finance Package, created to develop a single digital market, to help actors in the field of innovation, to control the development of fintech, start-ups. This regime should also carry out its work in relation to new technologies: AI and blockchain. This package was published by the European Commission in September 2020, and this is what it entails:

  1. retail payments should help in-store payments and e-commerce;
  2. the financial sector is entitled to digital resilience, which will enable it to minimize risks from cybersecurity and ICTs;
  3. EU asset markets (MiCAs) should be regulated;
  4. market infrastructures will be able to be piloted at the EU level. 2

The fintech sector has the following benefits, such as helping to prevent the COVID-19 pandemic and using blockchain technology and artificial intelligence.2

The cooperation between Deutsche Bundesbank, Deutsche Börse and the German Finance Agency is a prime example. In 2021, they developed and tested DLT-based securities settlement in central bank money using a "trigger" solution and transaction coordinator in TARGET2, the Eurosystem's large-value payment system. Fintech has allowed many capital markets actors to think about business models that will take their companies to the next level.3

Highly digital platforms as well as blockchain technologies have made it possible to publish promissory notes and securities in Germany. eWpG in 2021 has enabled the dematerialization of securities. "Neo-broker applications" are an innovation within German fintech. They operate on a commission-free basis. These companies trade products such as: stocks, commodities, currencies, exchange-traded funds, and digital assets. Zero cost to users has helped neo-brokers grow their business to a high level. Investments and capital markets have also helped neo-brokers in their operations. These entities can operate under their own BaFin financial services license or use the services of intermediaries working for them. Regulatory requirements and compliance with them is an indispensable point. Making a profit is important for neo-brokers, but the European Commission has jeopardized this type of activity.2

DeFi is a recent phenomenon in the fintech business. It could make a difference in the digital business space. The middle of 2020 was the starting point in the popularization of DeFi. Software solutions for securities tokenization as well as blockchain-based custodial services have been developed.2

Legislators and supervisors have recognized the fact that financial markets cannot operate without digital technology. Legislative packages related to cryptoassets, cryptocurrencies, staplecoins and ICOs have been created, providing for a single regulatory and licensing regime in the EU. The European Commission has offered to help develop DLT and blockchain-based technologies and increase regulators' understanding of these technologies.2

Client identification in Germany

Fintech in Germany

Fintech in other countries

Let's introduce you

Germany Fintech Lawyers

Silvia Calls

Silvia Calls

We work for international SMEs, startups and Telco's

Kristina Berkes

Kristina Berkes

Participation as a lawyer at investment venture funds, leading venture M&A deals in IT, supporting iGaming and business assets

Viacheslav Losev

Viacheslav Losev

Legal support for FinTech and Blockchain projects

  1. http://www.bafin.de/SharedDocs/Downloads/DE/BaFinPerspektiven/2018/bp_18-1_digitalisierung.html
  2. https://thelawreviews.co.uk/title/the-financial-technology-law-review/germany
  3. http://www.bundesbank.de/en/press/press-releases/dlt-based-securities-settlement-in-central-bank-money-successfully-tested-861444