Deutsche Bank, Germany’s largest financial institution with the value of assets worth $1.3 trillion and Europe’s ninth largest bank, has taken a significant step toward embracing digital assets. According to a Bloomberg report, the bank has applied for a digital asset custody platform license with the German finance regulator, the Federal Financial Supervisory Authority (BaFin). David Lynne, Deutsche Bank’s global head of corporate bank, confirmed this development while speaking at a recent conference, adding that the bank is “building out our digital assets and custody business.”
This move positions Deutsche Bank, which has been reportedly working on a crypto asset custody platform since late 2020, to potentially establish a “minimum viable product in 2021 while exploring global client interest for a pilot initiative.” It is worth noting that Deutsche Bank had previously expressed skepticism about digital assets, with a 2021 research note describing Bitcoin’s value as being “entirely based on wishful thinking.”
Germany has taken a generally welcoming approach toward the crypto industry, with lawmakers introducing a bill in 2019 to allow crypto custody and trading services across German banks and other licensed institutions. This was done by amending the European Union’s Fourth Anti-Money Laundering Directive. As of December 2022, BaFin had issued four licenses for crypto custody and provisional permits to 14 institutions. Among these wasCoinbase Germany, the first-ever company to secure a BaFin license for operating a crypto custody platform in June 2021.
More recently, in March 2023, German regulators granted licenses for both custody and trading services to Boerse Stuttgart Digital, the country’s stock market operator, and Finoa, a cryptocurrency trading platform.
With Deutsche Bank joining the digital asset space, it is clear that the blockchain future is becoming more intertwined with traditional financial institutions. However, the crypto industry is still nascent, and there may be concerns about the potential risks associated with centralizing digital asset management within large banks.
While Deutsche Bank’s move is definitely a significant milestone for the crypto industry and its enthusiasts, concerns regarding centralization and potential misuse of authority should not be overlooked. To cater to these contradicting viewpoints, further development of regulations ensuring transparent and secure management of digital assets will be essential. This will ensure that this promising blockchain technology and its markets can safely coexist with and enhance the traditional financial system.
Source: Decrypt
