By Kimberly Crain
Deutsche Bank, the largest banking institution in Germany, has successfully applied for a digital asset custody license to increase the firm value. The application was submitted to Federal Financial Supervisory Authority, commonly known as BaFin, for further regulatory review.Â
In an exclusive interview with Bloomberg, the head of commercial banking, David Lynne, confirmed that the Deutsche team was working on developing their digital assets along with a custodial platform. Lynne revealed that the bank had already applied for a digital asset service provider license.
Deutsche Set to Offer Crypto Custodia Services
Previously the Deutsche corporate unit had announced plans to expand its revenue streams by introducing digital assets services. The Deutsche team planned to conduct extensive market research to identify diverse customer needs. The proposed market test aimed at enabling the Deutsche team to develop a minimum viable product in 2021 that meets market demand.
However, the bank’s 2020 report failed to provide a clear timeline for the launch of the digital asset products.
Irrespective of the bearish market trend, the Deutsche Bank has recently demonstrated interest in Bitcoin assets. Interestingly the desire to explore new opportunities in the crypto sector has inspired the Deutsche Singapore unit to seek a strategic partnership with blockchain firm Memento.
The partnership between Deutsche and Memento aimed at developing a digital asset management access system (DAMA). The DAMA project will enable users to transfer their securities more effortlessly.
Beyond this, the team behind project DAMA leveraged their expertise to develop a digital asset fund and a soulbound token. The developers also launch a direct fiat-to-digital on-ramp that matches the user’s ever-changing needs.
Days after the launch of the DAMA project, the prominent securities processor in Germany, Deutsche WertpapierService Bank, invested in developing a Bitcoin-powered platform wpNex, for retail use.
Why are Banks Interested in Crypto Assets ?
Following the collapse of the Bahamian crypto exchange FTX that plunged high-profile crypto firms into a liquidity crisis, most banks in Germany exited the crypto space due to uncertainty in the market. Presently the crypto market has signaled a strong recovery wave which has hampered most firms from exploring new opportunities in the digital space.Â
A recent study illustrated that most financial institutions in Germany have invested in digital assets to maximize their returns.
In a statement, the DWS bank investment unit revealed plans to launch a digital assets custodial platform. The DWS announcement illustrated that the bank sought to enter into a partnership agreement with two crypto firms. The DWS has engaged in advanced talks with Deutsche Digital Assets and Tradias to deliberate on effective ways to increase revenue from the cryptos.
Review of Germany Crypto Regulation
Despite the positive stance developed by German businesses, the policymakers launched a new bill in 2019 to allow the banks to offer crypto custodial services along with other trading activities. The bill obliged the legislators to revise the Fourth Anti-Money Laundering Directive issued by the European Union to improve the crypto landscape.
The BaFin team released a report dated December 2022 outlining the German licensing regime. At that time, the BaFin team confirmed it had approved four crypto custodial licenses and around 14 provisional permits.
The BaFin report mentioned that the Coinbase Germany unit was the first firm to receive the approval of a crypto custodial permit in June 2021. Afterward, the BaFin team approved crypto custody permits for Boerse Stuttgart Digital and Fiona.Â
Editorial credit: Sergei Elagin / Shutterstock.com
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