DZ Bank’s current infrastructure makes it possible for the bank to take part in the exploratory phase of the ECB’s project testing the settlement of large-volume capital market transactions in central bank money.
Germany’s third-largest bank DZ Bank has launched a blockchain-based platform for the processing and custody of crypto assets. The platform will cater to institutional clients, offering them crypto securities the crypto bond from Siemens, which “DZ Bank subscribed to six months ago and which could now be transferred to self-custody.”
“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. In the medium term, we see DLT as a complementary technology to the established infrastructures in the existing capital market processes,” says Dr. Holger Meffert, Head of Securities Services & Digital Custody at DZ Bank.
DZ Bank began building the platform in 2022 and had previously served as a processor and custodian in the first external transaction of crypto fund shares from Bankhaus Metzler. Since both custody and processing are covered by the Electronic Securities Act (eWpG), the bank can take on this new role with its existing licenses.
In June, the bank applied for a crypto custody license from the Federal Financial Supervisory Authority (BaFin) to enable its institutional clients to invest in cryptocurrencies such as Bitcoin in the future. It is also working on an offer that will enable private customers to invest in crypto directly. Further, DZ Bank’s current infrastructure makes it possible for the bank to take part in the exploratory phase of the European Central Bank’s (ECB) project testing the settlement of large-volume capital market transactions in central bank money.
Ripple Labs subsidiary Metaco was tapped to provide infrastructural support after a thorough proof-of-concept and diligence process. The partnership was first announced in February 2023. According to a release from Metaco, its Harmonize™ platform was chosen for its complete alignment with the bank’s “requirements around security, scalability, and optionality for adapting fast to any changes in the future.”
German banks have, over recent months, been making cryptocurrencies more accessible to their customers. In March, Deutsche WertpapierServiceBank (Dwpbank) launched its wpNex crypto trading platform, giving 1,200 banks and savings banks in Germany access to the digital asset industry. In April, asset management group DWS, which is largely owned by Deutsche Bank, announced a partnership with Galaxy Digital with the aim of “developing a comprehensive suite of exchange-traded products (ETPs) on certain digital assets in Europe.” Other banks, including Commerzbank and DekaBank, have applied for crypto custody licenses with BaFin.