German banking giant, Deutsche Bank, has filed an application for a crypto custody license with the Federal Financial Supervisory Authority (BaFin), per a Bloomberg report.
Speaking at a conference on Tuesday, David Lynne, who leads Deutsche Bank’s commercial banking unit, said: “We just put our application into the Bafin for the digital asset license.” He added the move is part of the bank’s broader strategy to grow its fee revenue at its corporate banking unit.
Deutsche Bank first revealed plans to launch a digital asset custody platform for institutional clients in 2020. The bank outlined its plans in a December 2020 report by the World Economic Forum titled “Crypto, What Is It Good For: An Overview of Cryptocurrency Use Cases”.
In the report, the bank said that it had “completed its proof of concept and is aiming for a minimum viable product in 2021 while exploring global client interest for a pilot initiative”.
The proposed platform aims to streamline the management of various digital assets and fiat holdings within a single user-friendly interface, while also serving as a gateway for value-added services, be it from the custodian itself or third-party providers. The bank also plans to offer an institutional-grade hot/cold storage solution with robust insurance-grade protection to secure clients’ funds.
The report also stated that they will introduce the upcoming digital asset custody platform in four stages. Initially, the platform will offer insured custody services for vetted digital assets, catering to institutional investors such as asset managers, wealth managers/family offices, corporates, and digital funds.
The platform will then enable clients to buy and sell digital assets through partnerships with prime brokers, issuers, and trusted exchanges, ensuring a smooth integration across platforms. In the final phase, the platform will provide a range of value-added services, including taxation, valuation services, fund administration, lending, staking, voting, and an open-banking platform to facilitate the onboarding of third-party providers. Issuance and trading capabilities will also be part of the platform’s offerings.
A comprehensive suite of regulated banking services, including KYC/AML, compliance, settlement, and more, will also be included in the platform.
In April, DWS, the asset management arm of Deutsche Bank, announced a partnership with Galaxy Digital to develop a comprehensive suite exchange-traded products (ETPs) on certain digital assets in Europe.
BaFin, the German financial regulatory authority, has been granting licenses for crypto custody services. As of December 2022, BaFin had issued four licenses for crypto custody and granted provisional permits to 14 institutions, indicating the growing acceptance of digital asset custodianship in Germany. In June 2021, Coinbase Germany became the first company to secure a BaFin license for operating a crypto custody platform.
In March 2023, Boerse Stuttgart Digital, Germany’s stock market operator, and Finoa, a cryptocurrency trading platform, were both awarded custody and trading services licenses.
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