Among the institutions it expects to make use of this offering are banks, brokers, asset managers and family offices.

Blocknox, a part of Boerse Stuttgart’s digital unit, has received the final license as a crypto custodian from the country’s financial regulator, BaFin.

The license means Boerse Stuttgart Digital will be able to provide institutional investors with services for trading crypto as well as fiduciary custody, Germany’s second-largest stock exchange said in an email Thursday. Among the institutions it expects to make use of the offering are banks, brokers, asset managers and family offices.

BaFin licensing will allow the exchange to offer a “one-stop shop that’s fully regulated in Germany for brokerage, trading and custody of digital assets,” CEO Matthias Voelkel said in the email.

Boerse Stuttgart, which is the sixth-largest stock exchange in Europe and ranks behind the Frankfurt exchange in Germany, has been venturing into crypto services for several years. It unveiled a crypto trading app in 2018, reporting that it reached trading volume of over $1 billion in 2020.

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The Berlin-based firm also closed a strategic venture round led by Middlegame Ventures.

Cryptocurrency custodian Finoa has received three license approvals from Germany’s financial regulator BaFin, going against the grain of regulatory clampdowns and uncertainly happening elsewhere in the crypto space.

Finoa, which has been operating under a preliminary crypto custody license since January 2020, also closed a strategic venture round led by new investor Middlegame Ventures and including existing investors Balderton Capital, Coparion, Venture Stars, and Signature Ventures. The size of the investment was not disclosed.

Given the general state of regulatory uncertainty across crypto markets, including the U.S. Securities and Exchange Commission (SEC) recently announcing plans to focus specifically on crypto custodians, the seal of approval from BaFin couldn’t come at a better time, said Finoa co-founder Chris May.

“The custody license in particular is a very reassuring message to our customers and differentiates us from many other players in the market,” said May in an interview. “The preliminary regulatory status we have been under since the beginning of 2020 follows the same checkpoints and standards which the SEC followed through on a couple of weeks ago.”

In addition to the custody approval, Finoa received the go-ahead for broker dealer and prop trading licenses, which allows the firm to trade with its own treasury but not against its customers, May pointed out.

Finoa raised a $22 million Series A round back in 2021. Regarding the undisclosed level of this new funding, May said it wasn’t a major Series B round.

“As part of the license approvals we wanted to strengthen our statutory or regulatory capital,” he said. “Adding some millions to our balance sheet portrays trust to our customers and allows us to leverage the licenses to the fullest.”

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The financial regulatory authority for Germany, BaFin, has toughened warnings about consumers potentially losing all their crypto investments, unlike holdings with regulated banks.

Investing in cryptocurrencies could mean you lose all your money because there’s no state-sponsored protection, Germany’s financial regulator BaFin said Monday, in a toughening of previous warnings to retail investors.

In Germany, whether you get your money back from failed crypto projects depends on the details of insolvency law and exact conditions of the service, BaFin said, in an amendment to a February warning on crypto investments.

Recent collapses such as crypto lender Celsius have led to messy bankruptcy cases, where ex-customers must fight for their money back as part of lengthy legal proceedings.

If trading platforms or wallet providers turn south or go bust, “there is no protection covering customer losses, such as deposit guarantee schemes or investor compensation schemes,” the statement from BaFin says. “Such systems do not exist for crypto assets.”

In contrast, under European Union (EU) law, holdings with conventional banks are usually insured up to the value of 100,000 euros ($99,000), a move designed to protect consumers and prevent market panic turning into a bank run.

The EU recently struck a political deal on the Markets in Crypto Assets Regulation, MiCA, intended to regulate crypto and protect consumers, but it’s not in effect yet. In the meantime, the bloc’s financial watchdogs have warned potential buyers to be wary of get-rich-quick schemes that seem too good to be true.

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Newly formed Finoa Consensus Services is working with staking specialist StakeWise.

Six months after departing the European telecoms giant, Andreas Dittrich and Daniel Schrader – two of Deutsche Telekom’s former blockchain team – have helped create a unit at cryptocurrency custody provider Finoa for building infrastructure to support proof-of-stake (PoS) networks.

Finoa, regulated by Germany’s BaFin, will work with PoS specialist StakeWise, the companies announced Monday. The new Finoa Consensus Services subsidiary will offer liquid staking.

As Ethereum, the second-largest public blockchain, makes its transition from proof-of-work (PoW) mining to PoS, participants running transaction validator nodes are required to lock up ether (ETH) tokens on the network, for which staking yield can be earned over time. Offering participants a way to have their cake and eat it, liquid staking platforms provide users with IOU tokens representing assets bound to a network for staking and validation purposes, unlocking the ability to use those liquid tokens in decentralized finance (DeFi) protocols, for instance.

Finoa has offered in-custody staking for several years. It will run validators on the Ethereum network and become a StakeWise operator for both Gnosis and Ethereum, explained Dittrich, managing director of the new division.

“In our opinion, liquid staking will be on every single PoS network out there within a year or two,” Dittrich said in an interview. “Right now, this might be a new thing, but it will be abundant and very normal in the future. You can’t do without liquid staking.”

There’s a well-trodden path that leads innovators away from bureaucratic enterprises to nimble startups, a steady stream that flows from banks and blue-chip companies to crypto native firms.

“It was great working for Deutsche Telekom, with this awesome power behind you and being able to steer it once in a while,” Dittrich said. “But really, the speed at which you can move stuff in a company like Finoa is enormous and it’s fully crypto native. Something that had always been pretty exhausting at Deutsche Telekom was having to convince people, ‘do we want to do that blockchain thing?’”

Still, the recent collapse of the Terra UST stablecoin and its related LUNA, might influence regulators’ and the public’s perceptions of complex mechanisms used to earn yield from next generation blockchains.

“We expect regulation will come to this space. Maybe the pure infrastructure part of staking might remain like a technical or IT service. But if you are talking liquid staking that’s pretty close to becoming a financial service. We need to be ready for our institutional clients who want to actively support proof of stake networks but also want to do more with their assets. So we are preparing the crypto space for future regulation.”

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