Fintech 2026

GERMANY Law and Practice Contributed by: Stephan D. Meyer, Lars Fidan, Elisa Otto and Christian Meisser, LEXR

tion drives the entire downstream regulatory frame - work. 6.3 Impact of the Emergence of Cryptocurrency Exchanges Crypto exchanges have been the single biggest cata - lyst for regulatory change in this area. Germany moved early by bringing crypto custody under KWG super - vision in 2020, and that experience shaped MiCA’s EU-wide framework. Centralised exchanges now need CASP authorisation under MiCA, with full prudential, governance and mar - ket surveillance obligations. BaFin actively enforces against unlicensed operators. Decentralised exchanges are the open question. Where a DEX has identifiable governance structures or operators, BaFin may assert jurisdiction. Truly decen - tralised protocols remain difficult to regulate, though both BaFin and ESMA have signalled that governance token holders and front-end operators are not beyond reach. The MiCA review, expected to address DeFi by 2027, will determine how this grey area is resolved. 6.4 Listing Standards For traditional securities, listing on a regulated mar - ket requires compliance with EU prospectus, market abuse and ongoing transparency requirements. For crypto-assets under MiCA, issuers must publish a crypto-asset white paper that meets the content and format requirements specified in MiCA Title II, which must be notified to the relevant NCA. Regulated crypto-asset trading platforms have an obligation under MiCA to establish and publish their listing and delisting rules. Industry practice is evolving, with most platforms applying criteria such as liquidity, security audit results, team transparency and regula - tory compliance. For token issuers, understanding the listing requirements of their target platform early in the structuring process avoids costly delays. 6.5 Order Handling Rules For financial instruments, MiFID II requires firms to execute client orders promptly, fairly and transpar - ently, with established execution policies and conflict- of-interest controls.

MiCA is less prescriptive for crypto orders: CASPs must act in the client’s best interest and disclose their execution policy, but the detailed rules of MiFID II do not apply. BaFin expects high standards regardless. 6.6 Rise of Peer-to-Peer Trading Platforms P2P trading platforms have grown primarily in the crypto space, posing regulatory challenges because MiCA is designed around intermediated services. Where a platform merely provides technical infrastruc - ture without matching orders or holding funds, it may fall outside the regulated perimeter. However, BaFin’s position is that the actual function performed, not the label used, determines the regula - tory classification. If a P2P platform effectively match - es orders, provides escrow services, or exercises con - trol over the trading process, it is likely to be treated as operating a trading platform under MiCA and requires authorisation accordingly. 6.7 Rules of Payment for Order Flow Payment for order flow (PFOF) has been a contentious issue in the German market, driven by the rise of zero- commission neobrokers. Under MiFID II as amended by the MiFIR review, the EU banned PFOF for orders from EU clients with effect from March 2024. Germany is currently the only member state using the grandfa - thering exemption under Article 39a(2) MiFIR, which permits domestic PFOF until 30 June 2026. BaFin requires full transparency and disclosure during this transitional period. The incoming ban will require German neobrokers and other platforms that have relied on PFOF as a primary revenue model to restructure their pricing. Many affected firms have already begun transitioning to alternative compensation models, including small per-trade commissions or subscription-based pricing. 6.8 Market Integrity Principles The Market Abuse Regulation (MAR) sets the standard for traditional financial instruments: no insider dealing, no unlawful disclosure of inside information, no mar - ket manipulation. BaFin enforces these rules, backed by criminal sanctions under the WpHG.

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