As the global wave of tokenization of real-world assets (RWA) advances, Germany occupies a unique and important position in the RWA ecosystem in Europe and globally, thanks to its rigorous financial regulatory system, comprehensive legal framework, and highly institutionalized market. According to the annual report released by the Federal Financial Supervisory Authority (BaFin) in 2024, Germany currently has the most licensed crypto asset service providers in Europe, reflecting its leading position in the regulation of digital assets. The core of the German model is not to pursue disruptive innovation speed, but to seek legal certainty and compliance robustness for the application of blockchain technology within the existing mature financial regulatory system. This path provides high standards of compliance clarity for RWA, especially for security tokens, but also sets extremely high market entry and operational thresholds. Looking ahead, the development of the German RWA market will seek a dynamic balance between institutional optimization and global competition. According to predictions from the German Digital Economy Development Agency, by 2027, the size of the German digital asset market could reach three times its current size.
This article will objectively analyze the current development status of the RWA field in Germany from multiple dimensions, including regulatory framework, market practices, compliance challenges, and future trends, based on the latest regulatory dynamics, market data, and real cases, providing market participants with a panoramic view of operational reference value.
The RWA Research Institute proudly releases the "Global RWA Compliance Landscape Overview" series of in-depth research reports. The "Global RWA Compliance Landscape Overview Series" aims to study the regulatory legal policies of cryptocurrencies in major regulatory countries/regions such as the United States, Hong Kong, Singapore, Dubai in the UAE, Thailand, and Germany, as well as major regional projects, protocol technology construction, and architectural design, in an effort to provide readers with profound and comprehensive insights.
This is the fifth article in our series.
1. Legal Foundation: Synergy of Domestic Innovation and EU Unification
Germany has built a multi-layered, interconnected regulatory system for RWA, where the synergy between domestic legislation and EU regulations constitutes the core framework. According to data from the German Ministry of Finance in 2024, the issuance of registered digital securities in Germany has shown a stable growth trend since the implementation of the Electronic Securities Act (eWpG), reflecting the positive driving effect of the legal framework on market development.
The Electronic Securities Act (eWpG) is a key legislative breakthrough for Germany in the field of digital assets. The law came into effect in 2021, officially recognizing "crypto securities" based on distributed ledger technology (DLT) and allowing financial assets such as bonds and fund shares to be issued and registered in a digital native form without relying on traditional paper certificates. This provides a solid legal carrier for RWA tokenization. For example, the world's first security token offering (STO) case approved by BaFin—Bitbond—was successfully implemented based on the eWpG framework. In this case, Bitbond raised €1 million by issuing blockchain-based bond tokens to finance small and medium-sized enterprises, fully complying with the requirements of the eWpG and the Banking Act.
However, the applicability of the eWpG is currently limited to securities-type assets and does not cover payment tokens or utility tokens, which somewhat restricts its application boundaries. According to analyses by German legal experts, this limitation mainly stems from risk control considerations. In particular, for bearer shares, the Financial Action Task Force (FATF) views them as potentially risky instruments. Until the EU's legal framework on anti-money laundering is fully clarified, Germany cannot further expand the applicability of crypto bearer shares.
The innovative breakthrough of the eWpG is not only reflected in the technical aspect but also in its significant legal innovation. The law creatively incorporates electronic securities into the meaning of "things" under Section 90 of the German Civil Code through the legal fiction of 'thing', even if the data is non-material. This groundbreaking provision establishes the 'thing' property status of digital assets for the first time in the German legal system, clearing fundamental legal obstacles for subsequent technological applications.
However, the applicability of the eWpG shows obvious characteristics of cautious regulation. The law initially only covered bearer debt instruments (bonds) and was later expanded to include stocks through the Future Financing Act, but still restricts electronic bearer shares to be registered only in a central register. This limitation stems from deep-seated risk considerations: the FATF views bearer shares as high-risk instruments, and until the EU anti-money laundering framework is fully clarified, Germany chooses to adopt a cautious approach. This reflects Germany's emphasis on risk control when promoting innovation.
The Banking Act (KWG), as a universal regulatory cornerstone, imposes clear licensing requirements on institutions engaged in financial services such as crypto asset custody and trading. According to Section 32(1) of the KWG, any company conducting banking business or providing financial services in Germany on a commercial basis must obtain written permission from BaFin. BaFin conducts strict reviews of the capital adequacy, governance structure, and IT security standards of relevant businesses based on the KWG. Institutions providing crypto asset custody services must obtain special permission from BaFin, which directly relates to the custody of assets in RWA projects.
In terms of crypto asset custody, the KWG introduces strict organizational obligations. Institutions engaged in qualified crypto custody must ensure that clients' crypto tools and private keys are kept separate from the institution's own assets. If the crypto tools of multiple clients are held in a centralized manner, it must be ensured that each client's share in the total custody assets can be determined at any time. This provision is particularly important in the event of the bankruptcy of the custody institution, as the crypto tools held for clients under the qualified crypto custody framework are considered to belong to the clients, effectively protecting client assets from the impact of the custody institution's bankruptcy.
The arrival of the EU's Markets in Crypto-Assets Regulation (MiCA) marks a new phase in the regulatory environment. MiCA will be fully implemented by the end of 2024, establishing unified regulatory rules for crypto assets across the EU, including asset-referenced tokens (ART) closely related to RWA. According to the European Banking Authority, it is expected that over 500 crypto asset service providers will need to reapply for licenses under the new regulatory framework after MiCA is implemented.
Germany's existing framework, particularly the eWpG, has synergies and partial overlaps with MiCA. In the future, RWA platforms operating in Germany may need to meet both domestic eWpG and EU MiCA requirements simultaneously, or certain business activities may gradually be covered by MiCA licenses. BaFin's enforcement case against Ethena GmbH fully reflects the early implementation of MiCA rules in Germany. In 2025, BaFin halted Ethena's issuance of its USDe stablecoin in Germany due to significant organizational deficiencies in the MiCAR licensing process, improper asset reserve management, and failure to meet capital requirements.
It is noteworthy that MiCA achieves a pan-European unification of crypto service licenses at the EU level, but its regulatory scope does not cover crypto assets already regulated by existing EU financial services legislation, nor does it directly cover securities under distributed ledger technology. This means that Germany's Electronic Securities Act framework still maintains its independence and importance, especially in the issuance and registration of DLT securities.
Table 1: Main Legal Components of Germany's RWA Regulatory System
2. Compliance Path: Clear Guidance Under High Thresholds
Conducting compliant RWA business in Germany means adhering to a set of strictly standardized and transparently defined entry procedures, which come with significant time and economic costs. According to a survey conducted by the German Fintech Association in 2024, the average approval time for crypto asset licenses in Germany is as long as 18 months, far exceeding that of other EU member states.
Companies first face a complex licensing matrix. Depending on the scope of business, they may need to apply for a crypto securities registrar license (based on eWpG) and a crypto asset custody license (based on KWG). Most RWA platforms aiming to provide comprehensive services often need to apply for multiple licenses to cover the entire chain of business from asset issuance and registration to trading and custody. According to BaFin's official data, as of the end of 2024, Germany has issued approximately 35 crypto asset custody licenses, while the number of crypto securities registrar licenses is even more limited.
BaFin's approval process is known for its rigor and detail. The applying institution must submit an extremely detailed business plan covering technical architecture, target market, profit model, and risk analysis. According to several practitioners who have successfully obtained licenses, the business plan typically requires more than 200 pages of detailed explanations, including at least three years of financial forecasts and risk assessments. In terms of corporate governance, BaFin mandates the appointment of at least two directors residing in Germany, known as the "four-eyes principle," and conducts strict reviews of the professional reliability of these managers. Additionally, the platform's IT system must undergo rigorous external security audits to ensure compliance with Germany's high standards for data protection and cybersecurity.
The costs of this compliance path should not be underestimated. From preparation to final approval, the entire process typically takes 12 to 24 months. In terms of funding, initial capital requirements vary by license type; for example, the startup capital for crypto asset custody business is approximately €125,000 to €150,000. The total investment required during the entire application phase and to meet ongoing operational requirements, including legal consulting, technical audits, and personnel costs, is generally estimated by the industry to be between €1 million and €3 million. According to a report by the German digital asset compliance consulting firm Ankura in 2024, legal consulting fees account for the highest proportion of these costs, reaching 40% of the total costs, while technical audits and personnel costs each account for 25%, with the remainder being administrative and operational costs.
This high threshold objectively keeps many startups out of the market but also builds a strong compliance moat for the institutions that ultimately enter. It is noteworthy that with the implementation of MiCA, Germany is adjusting its domestic regulatory framework to improve approval efficiency while maintaining high standards. The Crypto Assets Market Regulation Act (KMAG), formulated in 2024 as the domestic implementation details of MiCA, further clarifies regulatory requirements and processes, providing more certainty for market participants.
3. Market Practice: Institutional Leadership and Case Validation
Germany's RWA ecosystem is characterized by the dominance of traditional financial institutions and highly specialized application scenarios. Traditional financial infrastructure is actively embracing tokenization. A notable example is Clearstream, a clearing institution under Deutsche Börse, which has announced plans to launch institutional-grade custody services for Bitcoin and Ethereum by 2025 and expand its digital asset business capabilities through the acquisition of Swiss company Crypto Finance AG. This reflects the gradual acceptance of digital assets by Germany's mature financial system. According to Deutsche Börse's Q3 2024 financial report, its investment in digital asset infrastructure has increased by 35% compared to the same period last year. Nevertheless, apart from a few pioneers, most large commercial banks in Germany remain in the internal pilot and cautious observation stage regarding RWA and have not yet made large-scale market deployments.
In terms of asset classes, bonds and fund shares, due to their high compatibility with the Electronic Securities Act (eWpG) framework, have become the main force in current tokenization. According to BaFin's 2024 statistics, among the digital securities issued based on eWpG, corporate bonds account for 65%, fund shares account for 20%, and other types of assets account for 15%. The tokenization of non-securities assets such as real estate and commodities faces more complex legal adaptation issues, often requiring the use of traditional legal structures such as special purpose vehicles (SPV), which increases operational complexity and costs.
The Bitbond STO case is a milestone in Germany's RWA compliance practice. This fintech company raised funds for small and medium-sized enterprises by issuing blockchain-based bond tokens and successfully obtained approval from BaFin. The key to its success lies in fully complying with the requirements of the eWpG and KWG, clarifying the securities nature of the tokens, and designing a compliant issuance structure. According to publicly available business data from Bitbond, since the project's launch in 2022, it has provided financing services to over 50 German SMEs, with an average financing scale of €200,000. However, its relatively small issuance scale also reflects that the German RWA market is still in the early stages of development.
The integration of technology and compliance is also deepening. To meet regulatory requirements, the smart contracts used in RWA projects must be auditable and encourage adherence to common token standards such as ERC-1400. According to a 2024 technical standards survey by the German Blockchain Association, over 80% of compliant RWA projects choose to use security-audited smart contract templates. At the same time, in terms of data privacy, project parties need to cleverly balance compliance and privacy, such as using off-chain storage for sensitive data and employing "soulbound tokens" for KYC verification, to meet the strict requirements of the EU's General Data Protection Regulation (GDPR).
Table 2: Main Asset Types and Compliance Points in the German RWA Market
4. Tax Environment: New Obligations in the Process of Transparency
Tax compliance is an indispensable part of RWA development, and Germany is actively promoting the process of tax transparency, which imposes new reporting obligations on RWA platforms. According to the German Ministry of Finance's 2024 tax reform plan, digital asset tax compliance will become a key regulatory area over the next three years.
The most notable change comes from the domestic implementation of the EU DAC8 directive. In June 2025, the German Federal Ministry of Finance announced a draft law to implement the DAC8 directive, which is scheduled to take effect on January 1, 2026. This directive aims to incorporate crypto assets into the EU's automatic tax information exchange framework. This means that RWA platforms operating in Germany will be regarded as "reporting crypto asset service providers," required to collect and report transaction information and tax identification numbers (TIN) of specific users (usually tax residents within the EU) to the German tax authorities, which will share this information across the EU. According to estimates from the German tax authorities, the implementation of DAC8 will result in over 1 million new crypto asset transaction reports each year.
This transformation complements the OECD's Crypto Asset Reporting Framework (CARF), together building a global network for crypto asset tax transparency. For RWA platforms and their users, this means that the complexity of tax reporting and compliance costs will increase. Platforms will need to invest resources to establish and improve tax information reporting systems, while investors will need to pay attention to potential taxable events arising from their RWA investments. According to estimates from German digital asset tax experts, compliant mid-sized RWA platforms will see their annual tax reporting expenditures increase by €150,000 to €200,000.
On the investment side, Germany's cryptocurrency tax policy is relatively friendly to long-term holders. According to current regulations, capital gains from the sale of crypto assets (including eligible RWA tokens) held for more than one year are completely exempt from capital gains tax. This policy provides a favorable tax environment for long-term value investment. However, short-term trading profits from assets held for less than one year are still subject to personal income tax, and mining income is considered business income and is taxable. Strict record-keeping of transactions is a prerequisite for fulfilling tax obligations, and the German tax authorities require investors to keep detailed records of each transaction's date, amount, and counterparty information. According to guidelines from the German Association of Tax Advisors, investors must retain complete transaction records for at least ten years.
It is noteworthy that Germany has maintained the independence of its tax policy during the implementation of MiCA. While MiCA has unified the market regulatory rules for crypto assets, each member state's tax policy is still determined by its own government. This means that Germany's cryptocurrency tax system, including the provision for personal investors to be exempt from tax after holding for more than one year, is based on independent regulations under the German Income Tax Act, which may become a competitive advantage for Germany in attracting long-term investments.
5. Risks and Challenges: Real Dilemmas and Potential Bottlenecks
The development of the German RWA market is not without its challenges, and participants must be acutely aware of the associated risks. According to BaFin's 2024 annual risk report, compliance risks in the digital asset sector are listed as a key area of monitoring.
Regulatory enforcement risks are real and penalties are severe. The previously mentioned case of Ethena GmbH is a typical example. BaFin not only halted its business but also took a series of tough measures, including freezing asset reserves, restricting management authority, and shutting down website functions. According to BaFin's enforcement report, Ethena's main issues were its failure to meet the capital requirements set by MiCA, the presence of illiquid investment products in its reserve assets, and significant omissions in its disclosure documents. This case exposed common compliance traps for project parties in reserve asset management, information disclosure, and capital adequacy. Particularly when its derivative sUSDe was suspected of being an "unauthorized securities issuance," it highlighted the risks of operating in legally ambiguous areas for innovative products.
High compliance costs and lengthy approval cycles create significant market entry barriers. According to a survey by the German Fintech Association, over 60% of startups believe that compliance costs in Germany are the main obstacle to their expansion in the EU market. This poses a huge challenge for startups and traditional small and medium-sized enterprises attempting to explore small-scale asset tokenization. While this high threshold ensures market stability, it may also suppress market diversity and innovation to some extent.
The limitations of the legal framework cannot be overlooked. The eWpG currently only targets securities-type assets, leaving a large number of non-securities assets with tokenization potential, such as real estate, artworks, and intellectual property, in a regulatory gray area. According to statistics from the German Blockchain Law Center, approximately 35% of German enterprise tokenization projects need to seek alternative solutions due to asset types not falling within the scope of the eWpG. For these assets, project parties often have to revert to complex and costly traditional legal structures, undermining the efficiency advantages of tokenization itself.
Issues of regulatory alignment in cross-border operations also present potential bottlenecks. Although MiCA aims to unify EU rules, the alignment and coordination with domestic laws such as Germany's eWpG in specific details during its initial full implementation may still require time and more cases to clarify, creating some uncertainty for platforms conducting cross-border operations. According to predictions from the European Blockchain Association, full coordination between MiCA and national laws may not be achieved until the end of 2026.
6. Future Outlook: Balancing Stability and Vitality
In the short term (1-2 years), the focus of the market will be on the formal implementation and execution of the DAC8 directive, which will directly impact the tax compliance processes of all RWA platforms. At the same time, with the full implementation of MiCA before the end of the 2026 transition period, German regulatory authorities and market participants will further promote the integration of the domestic framework with EU rules, aiming to release the institutional dividends of a "single license valid across the EU." According to BaFin's roadmap, 2025 will focus on advancing the digitalization of regulation to improve approval efficiency and regulatory transparency.
In the medium to long term, technological iterations and new application scenarios will shape the market landscape. If the exploration of wholesale central bank digital currencies (CBDC) can be successfully integrated with the settlement phase of RWA, it will greatly enhance the efficiency of institutional applications. Additionally, leveraging Germany's traditional advantages in ESG (Environmental, Social, and Governance), the tokenization of products such as green financial bonds and sustainability-linked bonds may become the next growth point. According to data from the German Sustainable Finance Alliance, the issuance of green bonds in Germany increased by 40% year-on-year in 2024, providing a rich asset base for tokenization.
Positioning Germany within the global RWA landscape can be aided by the "Six-Dimensional RWA Policy Research Framework" proposed by China Galaxy Securities Research. Under this framework, Germany and the EU as a whole are classified as "strong regulation, safety first," characterized by high regulatory maturity and strong legal certainty, while the tax friendliness and market entry flexibility are relatively lower than in regions like Singapore and the UAE, which are "innovation-oriented, pilot-first." This suggests that the German model is more suitable for institutional participants with conservative risk preferences, seeking long-term stable operations and possessing strong capital strength.
It is noteworthy that the German government has recognized the suppressive effect of high thresholds on innovation. According to the "Digital Finance Development Strategy" released by the German Ministry of Finance in 2024, it will consider establishing a regulatory sandbox mechanism for small-scale innovative projects in the future, providing more flexible compliance paths for innovative enterprises while strictly controlling risks. If this initiative is implemented, it may improve the current market ecology to some extent.
Conclusion
Germany offers a unique development paradigm for the global RWA market—it may not be the most radical or fastest, but it is undoubtedly one of the most rigorous and stable paths. Through forward-looking legislation such as the Electronic Securities Act, Germany provides solid legal certainty for securities-type RWA; through BaFin's strict regulation and high licensing thresholds, it establishes high-quality compliance standards; and by embracing the EU MiCA framework, it actively integrates into and shapes the future of regional regulatory integration.
However, this order and certainty do not come without a cost. High compliance costs, lengthy approval cycles, and an evolving asset coverage scope are all real challenges that market participants must face. According to our analysis, these characteristics make the German market particularly suitable for two types of participants: first, traditional large financial institutions seeking digital transformation, and second, professional investment institutions with ample capital and patience. For resource-limited startups, it may be necessary to prioritize regions with more flexible regulatory environments.
For RWA projects aiming for the long term and serving institutional clients, Germany offers not just a market access license but also a deep endorsement of trust. Choosing Germany means opting for a development path that is asset-heavy, long-cycle, but fundamentally solid. In the global RWA competition, the German model demonstrates that in the forefront of financial innovation, order itself can become a powerful competitive advantage. With the continuous improvement of the regulatory framework and the deepening of market practices, Germany is expected to maintain its leading position in the institutional RWA application field, becoming an important issuance and trading center for high-quality digital assets.
Author: Liang Yu Editor: Zhao Yidan
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