Deutsche Bank to establish crypto business in Germany

abdelaziz Fathi

Deutsche Bank AG has taken a step in the crypto industry by applying for regulatory approval to operate as a cryptocurrency custodian in Germany.

Interestingly, this move comes just days after BlackRock, the world’s largest asset manager, filed with the U.S. Securities and Exchange Commission (SEC) to establish a spot bitcoin exchange-traded fund (ETF). These consecutive announcements highlight the increasing involvement of traditional financial players in the world of cryptocurrencies.

Speaking at a conference, Deutsche Bank’s global head of corporate bank David Lynne said that the bank is actively expanding its digital assets business. He further confirmed that Deutsche Bank has submitted an application to Germany’s securities watchdog, Bafin, seeking regulatory permission for a digital asset license.

The Deutsche Bank’s digital asset custody prototype was first announced in 2020. At the time, the lender said it aims at creating a custody platform specifically designed for institutional clients to establish a seamless connection between them and the broader cryptocurrency ecosystem.

The move by Germany’s largest banking institution towards digital asset custody services aligns with a similar shift within its investment arm, DWS Group. The latter invested in Deutsche Digital Assets, a provider of crypto exchange-traded products, and Tradias, a market maker in the crypto industry.

Deutsche Bank has outlined its business model for its digital asset custody services. Initially, the bank plans to generate revenue through custody fees, which will be charged for securely holding clients’ digital assets. As the service progresses, it intends to expand its fee structure to include charges for tokenization services and trading functionalities.

The bank has already completed a proof of concept and is now focused on developing a minimum viable product (MVP). During this process, Deutsche Bank is actively assessing the level of global client interest to gauge the demand for its custody services.

Deutsche Bank’s digital asset custody platform, slated to be launched incrementally, aims to offer a wide range of services to users. In addition to securely storing digital assets, the platform envisions facilitating the buying and selling of these assets through prime brokers. As the platform evolves, Deutsche Bank plans to expand its offerings to include various value-added services.

Some of the services the bank aims to provide include taxation services to assist users in managing their tax obligations related to digital assets. The platform will also offer valuation services and fund administration to help users track the performance and value of their digital asset portfolios. Additionally, services like lending, staking, and voting are expected to be integrated into the platform, allowing users to lend out their assets, participate in staking protocols, and engage in voting processes.

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