Germany: A FinTech Legal Overview
Germany – One of Europe’s Leading Hubs for Regulated and Scalable Fintechs
Germany as a fintech location
Germany stands out as Europe’s largest economy and a leading centre for fintech, banking and digital asset innovation. It combines market scale with strong regulatory credibility, offering a high degree of legal certainty and supervisory reliability. Through its active role in shaping European financial policy and infrastructure, Germany has established itself as a pivotal jurisdiction and a cornerstone of Europe’s digital and financial sovereignty.
Regulatory approvals obtained in Germany are widely recognised for their robustness, enabling efficient EU-wide scaling under harmonised frameworks such as MiCAR and DORA and making Germany particularly attractive for institutions prioritising long-term regulatory certainty.
Germany plays a central role in modernising Europe’s payments landscape. Initiatives such as giroAPI and Wero under the European Payments Initiative highlight Germany’s leadership in interoperable and sovereign payment solutions. At the same time, players such as N26, Trade Republic and Scalable Capital demonstrate how regulated financial products can be successfully built, licensed and scaled from Germany across the EU.
In the digital asset space, Germany is widely recognised as one of the most attractive crypto and tokenisation markets, supported by early regulatory clarity, strong engagement from the German Federal Financial Supervisory Authority (BaFin), and a robust institutional framework.
Regulatory landscape and fintech trends
Germany’s appeal as a fintech hub is closely tied to its regulatory environment, characterised by oversight from BaFin and a comprehensive legal framework. While demanding, the regulatory regime offers a high degree of legal certainty and supervisory consistency, which has become increasingly important as fintech business models scale and intersect across regulatory regimes. Although having a reputation for being strict, unlike other European supervisory authorities, BaFin is open to discussions and practical consultations on new business models, which can be an advantage in the innovative fintech environment.
Crypto-assets
With the full implementation of the Markets in Crypto-Assets Regulation (MiCAR), Europe’s crypto market has entered a new phase of institutionalisation. Germany enters this phase from a position of regulatory maturity, having already subjected key crypto-related activities to financial supervision under national law, including custody, trading and brokerage, well before MiCAR took effect. As a result, supervision and market practice in Germany are more advanced and more accustomed to formal regulatory requirements in the crypto sector than in many other member states.
Germany has to date issued the highest number of MiCAR authorisations for crypto-asset service providers within the EU. This highlights a supervisory practice that is widely regarded as efficient and reliable and demonstrates how early regulatory experience is now translating into smoother authorisation processes and increased market readiness. In parallel, Germany’s crypto market is undergoing rapid institutional development, with market activity centred on the development of comprehensive on-chain financial infrastructure, including trading, custody, token issuance and DLT-based payment and settlement solutions.
Tokenisation of assets
Tokenisation has moved firmly into the regulatory mainstream. Germany has taken a structurally important step by introducing the Electronic Securities Act (eWpG), which provides a clear legal framework for the issuance of crypto securities. As a result, tokenisation is no longer treated as a standalone crypto use case but is increasingly embedded within established capital markets and civil law structures.
Stablecoins – between crypto and payments
Stablecoins, including e-money tokens, serve as a key interface between crypto-assets and the regulated payments framework. Their payment-like features mean that specific activities fall at the intersection of MiCAR and EU payments regulation. In this context, crypto-asset service providers offering the transfer of e-money tokens may require additional authorisation under PSD2. The European Banking Authority has addressed this overlap in its No Action letter, providing for a transitional grace period until March 2026, with further clarity anticipated under the forthcoming PSD3 and Payment Services Regulation (PSR).
Early market experience in Germany shows that, where crypto-asset service providers already meet comparable organisational and compliance standards, streamlined PSD2 authorisation processes may be applied. This approach supports fintech innovation while safeguarding regulatory coherence and consumer protection.
Digital payments and the evolving EU payments framework
Germany benefits from a highly developed and robust payments ecosystem, which continues to underpin innovation in both B2C and B2B digital payments. Recent market trends demonstrate that embedded payment models, with payment functionality integrated directly into digital platforms, have become a defining feature of this evolution.
The upcoming PSD3 and PSR will subject the payments landscape in Germany and the EU to further change. While these reforms introduce additional compliance requirements, they are also expected to enhance legal clarity and harmonisation across the EU. Particular challenges are likely to arise at regulatory interfaces, notably with MiCAR and initiatives such as the EU Digital Identity Wallet.
Looking ahead, Germany offers favourable conditions for the next phase of innovation at the intersection of payments, data and technology, including AI-driven payment solutions and the continued expansion of social commerce.
Open finance and data-driven financial services
The proposed Financial Data Access Regulation (FiDA) is expected to unlock significant potential by extending open banking towards a broader open finance framework. In Germany, this development is accompanied by practical market initiatives that already enable selected Open Finance use cases. Initiatives such as giroAPI demonstrate how standardised interfaces can facilitate early implementation and scaling of Open Finance concepts within a regulated environment.
AML compliance and artificial intelligence
Artificial intelligence is increasingly used to enhance transaction monitoring, fraud detection, customer due diligence and risk management. Within this context, AML remains a central supervisory priority, with BaFin emphasising elevated risks of money laundering and terrorism financing, particularly in complex, digital and platform-based business models.
This focus is reflected in enforcement practice, with penalties imposed for deficiencies in AML controls and governance. The forthcoming EU Anti-Money Laundering Regulation (AMLR) will introduce a harmonised EU framework, significantly expanding the scope and practical impact of AML obligations beyond traditional financial services.
Digital operational resilience
DORA significantly reshapes the regulatory treatment of ICT and cloud outsourcing in Germany. BaFin has accompanied its implementation with extensive supervisory guidance, issuing numerous publications to translate EU-level requirements into concrete expectations for financial institutions, particularly regarding ICT risk management, outsourcing governance and concentration risk.
A key focus is systemic cloud concentration: the ten largest critical third-party technology providers account for around 85% of all contracts with the European financial sector, creating significant dependencies on global hyperscalers. DORA addresses this risk through enhanced oversight of providers supporting critical or important functions, expanded risk management duties, mandatory contractual standards and EU-level supervision of designated critical providers.
In parallel, Germany is promoting sovereign cloud initiatives such as GAIA-X and regulated “Sovereign Cloud” offerings under German or EU legal control, which are becoming increasingly relevant for DORA-compliant outsourcing strategies.
Outlook
The European financial sector is entering a further phase of regulatory development driven by EU legislative initiatives aimed at deeper harmonisation and stronger market integrity. Germany is well positioned in this environment, with supervisory authorities and market participants already focused on practical implementation across key regulatory areas.
Despite remaining challenges at regulatory interfaces, Germany offers favourable conditions for structured and solution-oriented implementation. Market participants that align their business models, governance and compliance structures with the evolving regulatory landscape will be well placed to navigate upcoming reforms and achieve sustainable growth across the EU. At the same time, Germany offers a high degree of economic security, regulatory reliability, and strong purchasing power on the customer side, as well as being the largest market within the EU, which makes it very attractive for fintech companies from an economic perspective. Many international fintechs therefore like to use the German market as a gateway to the European market.