DZ BANK has launched a new platform for the processing and custody of digital financial instruments.
This makes the leading cooperative institution one of the first credit institutions “to launch such an offer for institutional customers based on blockchain technology.”
With a volume of over EUR 300 billion, DZ BANK is “the third largest depository in Germany after BNP Paribas and State Street and is the largest among German depository institutions.”
Dr. Holger Meffert, Head of Securities Services & Digital Custody at DZ BANK, said:
“We assume that within the next ten years a significant proportion of capital market business will be processed via distributed ledger technology (DLT)-based infrastructures. In the medium term, we see DLT as a complementary technology to the established infrastructures in the existing capital market processes.”
To operate the new custody solution, the bank has “hired more than a dozen employees in IT, operations and compliance.”
The bank has been working with blockchain technology for years, and in 2022 it began building a digital custody platform for institutional customers.
Here it will initially take crypto securities into custody.
This includes a crypto bond from Siemens, “which Union Investment and DZ BANK subscribed to six months ago and which could now be transferred to self-custody.”
DZ BANK had previously been “involved as processor and custodian in the first external transaction of crypto fund shares from Bankhaus Metzler. Since both cases fall within the scope of the Electronic Securities Act (eWpG), custody is already possible with the existing licenses.”
In order to enable institutional customers “to invest in cryptocurrencies such as Bitcoin in the future, DZ BANK applied “for a crypto custody license from the Federal Financial Supervisory Authority (BaFin) in June.”
In parallel to the solution for institutional customers, the bank is “working on an offer that allows private customers to invest directly in cryptocurrencies.”
With the existing infrastructure, the bank is also “able to actively participate in the European Central Bank’s (ECB) exploration phase, in which the settlement of large-volume capital market transactions in central bank money is tested.”