Key takeaways:
- Deutsche Bank recently requested regulatory approval to provide custody services for digital assets.
- Custody services for digital assets relate to safeguarding and administrating digital assets like cryptocurrency.
The biggest bank in Germany, Deutsche Bank AG, recently requested regulatory approval to provide custody services for digital assets like cryptocurrency.
According to David Lynne, who oversees the lender’s commercial banking division, this action is part of a larger plan by Deutsche Bank to boost fee income for its corporate division. It also emphasizes the bank’s initiatives to increase revenue for its investment arm, DWS Group, through services connected to digital assets. In a statement to Bloomberg, Lynne stated:
“We’re building out our digital assets and custody business. We just put our application into the Bafin for the digital asset license”
The custody services for digital assets are relevant for both institutional and private investors because they refer to the safekeeping and administration of digital assets such as cryptocurrencies. To access and transfer digital assets, private keys must be kept in highly secure offline or online storage, which is how these services work.
In the past, there have been more than one instance in which Deutsche Bank has taken steps to provide custody services for digital assets. In 2020, it made a similar attempt, but there was no indication as to when the company would begin offering the services to customers.
The demand for regulated custodial solution providers will increase as institutional player activity in the cryptocurrency market increases. As a result, Deutsche Bank is acting at the ideal time, as significant firms like BlackRock and Fidelity have already signaled their intention to enter the cryptocurrency market.
The new action by Deutsche Bank comes only a few months after the bank had a severe liquidity problem in March of this year following the collapse of Credit Suisse. However, the massive German financial organization confidently made it through this and appeared to be in good shape.
On the other hand, German legislators have also been attempting to relax the laws governing crypto staking and lending. Additionally, with the implementation of the MiCA regulations, regulatory developments will become even more streamlined. Germans have been adopting cryptocurrencies more frequently recently, and this trend will continue as soon as regulatory uncertainty is resolved.
