DZ Bank, one of Germany’s leading financial institutions with assets totaling 300 billion euros, has recently announced the launch of its own blockchain-powered custody platform. The platform is specifically designed to cater to institutional clients, allowing them to engage in cryptocurrency investments.
Expanding Services to Institutional and Individual Customers
While the initial focus of the digital custody platform is on institutional customers, DZ Bank has plans to expand its services to include the purchase of cryptocurrencies for both institutional investors and individual customers. To enable secure storage and management of digital assets, the bank has applied for a crypto custody license from the German Federal Financial Supervisory Authority (BaFin) in June 2023.
“We assume that within the next ten years, a significant proportion of capital market business will be processed via distributed ledger technology (DLT)-based infrastructures,” said Holger Meffert, the head of securities services and digital custody at DZ Bank. “In the medium term, we see DLT as a complementary technology to the established infrastructures in the existing capital market processes.”
Embracing Cryptocurrencies in Germany
DZ Bank’s entrance into the digital asset space aligns with a growing trend among German banks to embrace cryptocurrencies, despite the country’s stringent regulatory environment. Deutsche WertpapierServiceBank, in March, introduced the wpNex crypto trading platform, providing access to the digital asset industry for 1,200 banks and savings banks in Germany. Likewise, DWS, an asset management group majority-owned by Deutsche Bank, is developing exchange-traded products for cryptocurrencies in the European market and exploring digital solutions to tap into blockchain applications and digital assets.
Commerzbank and DekaBank, two traditional banks in Germany, have also applied for crypto custody licenses from BaFin, signifying the industry’s wider shift towards embracing digital assets.
Exploring Seamless Communication Between Blockchain-Based Transactions
In a recent development, Deutsche Bank and Standard Chartered’s venture arm SC Ventures revealed that they are exploring a solution aiming to enable seamless communication between blockchain-based transactions, stablecoins, and central bank digital currencies (CBDCs). The two banks are actively testing the concept using the Universal Digital Payments Network (UDPN), a permissioned blockchain system involving a consortium of banks, financial institutions, and consultancies operating validator nodes.
BitGo, a cryptocurrency firm, has also obtained a cryptocurrency custody license from BaFin, following years of operations in Germany as part of a transitional regime.
