Cryptocurrency exchange Coinbase is tapping German fintech banking platform Solarisbank’s know-your-customer (KYC) system. 

The arrangement, announced Wednesday, further strengthens Coinbase’s position in Germany, where it recently became the first company to win a crypto custody license from the country’s financial regulator, BaFIN.

Solarisbank, which also has a crypto custody license pending, holds a banking license in Germany, making the fintech firm a nice fit for a crypto exchange.

“As a regulated institution, Coinbase needed a partner to help identify customers, compliant with the AML laws in Germany,” Delia König, Managing Director Identity at Solarisbank, said in an interview. “We were in touch quite early on and showed them what our suite of KYC methods was capable of.”

Coinbase is the first crypto exchange to use Solarisbank’s KYC platform, which is also used by the likes of Samsung Pay, König said, adding that it’s unfortunate that KYC regulations in Europe are not really harmonized, making it a struggle for many companies.

The go-to method in Germany and many other places for KYC is video identification, where a user talks to an agent in a video chat and shows their ID card. Coinbase will also use Solarisbank’s “Bankident” solution, which does not require face-to-face interaction with a physical agent.

“Bankident lets you identify based on an existing account that you have, such as an account with Deutsche Bank,” König said. “You are basically logging into the bank, and when you initiate a transaction, we make sure you have been already identified for this account before and with that your KYC is valid.”

König pointed out that having a banking license makes Solarisbank a safe bet for Coinbase going forward.

“We have to fulfill the same obligations and audits as a bank, which played a big role,” she said. “And for sure, we wouldn’t say no to more collaborations with Coinbase on other projects.”