Deutsche Bank Takes a Forward Step: Pursuing a Digital Asset Custody License from BaFin

Germany’s largest banking institution, Deutsche Bank, is making strides in the digital asset space as it reportedly applies for a digital asset custody license from the Federal Financial Supervisory Authority (BaFin). This move aims to diversify the bank’s revenue streams and capitalize on the growing demand for digital asset services, including cryptocurrencies, according to Bloomberg.

Deutsche Bank’s investment arm, DWS Group, had previously shown interest in investing in German crypto firms, such as Deutsche Digital Assets and market maker Tradias. The application for a digital asset custody license aligns with the bank’s corporate bank division’s plans to offer digital asset-related services, which were first revealed in 2020. While no specific timeline has been announced, David Lynne, head of Deutsche Bank’s commercial banking unit, confirmed the bank’s pursuit of a license from BaFin.

The bank’s attitude toward cryptocurrencies has undergone a transformation in recent times. Although Deutsche Bank had expressed criticism of Bitcoin and concerns over the crypto market’s volatility in previous years, its stance has evolved. In February, Deutsche Bank Singapore collaborated with Memento Blockchain to conduct trials for Project DAMA (Digital Assets Management Access), a tokenized investment platform. The platform introduced a fiat-to-digital on-ramp and utilized a unique soulbound token for the digital asset fund.

Notably, other German financial institutions have also started embracing the crypto industry. Deutsche WertpapierService Bank, a German securities processor, launched wpNex, a Bitcoin-focused platform catering to retail customers. wpNex offers crypto accounts alongside traditional bank accounts, streamlining the user experience by eliminating the need for additional Know Your Customer processes.

The shift in stance among Germany’s banking institutions signifies a changing landscape in 2023. Previously wary of the crypto industry due to its perceived volatility and unpredictability, major banks are now exploring opportunities to integrate digital asset services for their clients. As Deutsche Bank ventures into digital asset custody services, it joins the ranks of institutions recognizing the potential and value of digital assets in today’s financial landscape.

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