They also stated that Bitcoin (they stated Crypto Currecys) is indeed a monetary value and therefore falls under the definition of a electronic instrument of payment. That also implies, that BTC service providers fall under the definition of a financial services business.
Yeah as far as I understood their letter they compared bitcoins to private tokens of value (kind of like a private currency) issued by a business like air miles by an airline or something like that.. which as you've implied they will want to regulate and will shut down anyone without a license, just like the letter told the person it was intended to.
Would this not be a good thing then? (Besides the supposed draconian requirements Bitcoin companies will now need to fulfil) They are saying Crypto Currencies are a monetary instrument, it's nice validation to have Germany say it.
It's a two edged sword. Yes they give all businesses under their rule the green light to use bitcoins legally but they also asserted themselves (the small gang of thungs rulling over everyone through violence) to have the authority to regulate any business that deals exclusively with bitcoins which is very very bad.