Deutsche Bank’s application for regulatory approval is a positive step toward the development of a regulatory framework for digital asset custody services in Germany.
Deutsche Bank AG (ETR: DBK), one of the leading financial institutions in the world, is seeking regulatory approval from Germany’s financial market regulator, BaFin, to operate a custody service for crypto assets, including cryptocurrencies. Interestingly, this move is a significant step towards the banks’ entry into the digital asset space, which has been gaining traction in recent years.
According to a Bloomberg report, David Lynne, head of Deutsche Bank’s commercial banking unit, mentioned the bank’s application during a conference. Per the report, the custody service would allow Deutsche Bank to store and manage digital assets on behalf of its clients.
Digital assets, such as cryptocurrencies, are becoming increasingly popular as a store of value and a means of payment. However, the lack of a secure and reliable custody solution has been a major hurdle for institutional investors looking to enter the digital asset space.
As such, Deutsche Bank’s entry into the digital asset custody space would provide a much-needed solution for institutional investors, who require a secure and reliable way to store and manage their digital assets. Meanwhile, the bank’s reputation for security and reliability makes it an ideal candidate to provide such a service, although the bank must comply with strict regulatory requirements to ensure the safety of its clients’ digital assets.
Deutsche Bank Steps into the Crypto Space
Undoubtedly, Deutsche Bank’s application for regulatory approval is also a positive step toward the development of a regulatory framework for digital asset custody services in Germany.
Recall that the Frankfurt-headquartered bank has been making plans to enter into the crypto industry since 2020, but never decided on a timeline. In February, its asset management arm decided to explore the option of investing in two German-based crypto companies as part of its growth strategy.
Notably, the bank’s entry into the digital asset space could also encourage other financial institutions to follow suit, which could help further legitimize the digital asset industry and promote its adoption.
Aside from Deutsche Bank, Bank of New York Mellon Corp (NYSE: BK), America’s oldest bank has extended its custody services to cryptocurrencies. Interestingly, BNY Mellon is the first bank to use one platform to offer custody for both traditional and crypto holdings. This means that the banks can now hold digital assets, including Bitcoin (BTC), Ethereum (ETH), and the like on behalf of their customers.
The move has also showed the health in Deutsche Bank’s business prospects. Amid the crisis that ravaged the industry earlier in the year, the German bank posted a net profit of 1.158 billion euros, or $1.28 billion in its Q1 2023 earnings report which ended on March 31, continuing an 11th straight quarterly profit. Also, its first-quarter revenue came in at 7.7 billion euros, up from the 7.33 billion euros reported during the same period in 2022.