Digital Assets: Deutsche Bank Submits Application to Germany’s BaFin to Serve as Crypto-Asset Custodian

Deutsche Bank AG (ETR: DBK) has reportedly submitted an application for obtaining regulatory clearance to serve as a digital asset custodian, based in Germany, the bank revealed on Tuesday (June 20, 2023).

As first reported by Bloomberg, this latest development from Deutsche Bank comes only a few days following asset management firm BlackRock‘s announcement that it had filed with the US Securities and Exchange Commission (SEC) to launch a spot Bitcoin Exchange Traded Fund (ETF).

Deutsche Bank stated back in February 2021 that it would be considering offering digital asset custody services in order to provide “institutional-grade” hot and cold storage services with “insurance-grade” protection.

The crypto-asset custody service, which Deutsche Bank stated back in early 2021 could be rolled out in phases, may eventually enable clients to purchase and sell virtual currencies via prime brokers and also offer services like taxation, valuation assessments, and even fund administration, lending, staking and voting.

Deutsce Bank has been fairly engaged in the nascent sector for a relatively long period of time.

Notably, the banking institution’s asset management unit, DWS, was reported to have taken part in discussions in order to acquire a minority stake in several crypto-focused firms potentially – Deutsche Digital Assets, a provider of ETPs, as well as trading platform Tradias.

David Lynn, who is in charge of Deutsche’s commercial banking division, recently revealed that the financial institution is currently focused on building out its digital asset and custody-focused business operations. This, according to a report from Bloomberg.

In February of this year, DWS Chief Executive Stefan Hoops stated that the relatively low crypto-asset prices might lead to “interesting” opportunities for the asset management unit.

The steady growth of the volatile cryptocurrency market during the past few turbulent years has managed to gain the attention of larger, more traditional financial institutions and established banking institutions, resulting in a strong wave of mainstream adoption for crypto-assets.

Once thought of as a rather niche and speculative investment ecosystem (even now to some extent), virtual currencies and blockchain/DLT are now increasingly being leveraged by prominent financial services providers looking to take advantage of the benefits and opportunities that decentralized platforms could provide.

This is why the recent announcement from Deutsche Bank, one of Germany’s largest lenders, is potentially quite significant.

With this recent announcement, Deutsche Bank’s approved application to acquire a permit for offering digital asset custody solutions could position it to diversify its current business operations.

According to multiple reports, David Lynne, Head of Deutsche’s commercial banking unit, was quoted as saying:

“We’re building out our digital assets and custody business. We just put our application into the Bafin for the digital asset license.”

Once it has been granted the permit, the European financial institution, with a balance sheet of over €1.3 trillion, will be able to offer crypto custody services compliantly.

Digital asset custody services are essentially the secure storage and management of crypto-assets on behalf of institutional and individual investors.

These digital services include storing private keys, which are required for gaining access to and transferring crypto-assets in what’s considered to be a secure offline and/or online storage environment.

As noted by Lynne, this latest development from Deutsche Bank could be part of the institution’s broader business strategy to raise fee-related earnings at its corporate banking division.

Deutsche’s corporate bank unit had initially hinted on its intention to serve as a digital asset custody provider as far back as 2020. But the bank has not yet shared any pertinent details regarding a product rollout timeline since that time.

In April of this year, Deutsche Bank’s asset management unit DWS entered a partnership with US-headquartered Galaxy Digital in order to introduce exchange-traded products for crypto-assets.

Sponsored Links by DQ Promote



Send this to a friend