Deutsche Bank's asset management arm explores stakes in two crypto firms
According to people familiar with the matter, DWS Group, led by Chief Executive Officer Stefan Hoops, has held several discussions focused on acquiring a minority stake in Deutsche Digital Assets, a Frankfurt-based provider of crypto exchange-traded products.
Tradias, a market-making firm owned by Bankhaus Scheich, is another potential target for investment. In late 2021, Frankfurt prosecutors selected Tradias to sell confiscated cryptocurrency in a way that minimized volatility. Like with DDA, discussions to invest in Tradias center on purchasing a minority stake.
The pivot to crypto comes as Hoops is attempting to rehabilitate DWS’s reputation after allegations of greenwashing resulted in probes by US and German authorities. It's an interesting approach to take since the crypto ecosystem has been rocked by its own scandals and doesn’t exactly have a sterling reputation with global regulators.
In December, Hoops provided an outline of the bank’s strategy for blockchain and digital currencies, which included a plan to “Build-or-buy various specific blockchain-related services” as a way to “lay the foundation for a digital future.”
During an earnings call last week, Hoops said that DWS has “started to assess strategic partners and commence due diligence on potential targets” in areas where it wants to develop new capabilities, such as digital assets. According to Hopps, the recent drop in digital asset prices could yield “interesting opportunities” for DWS.
Interest in blockchain technology and how it can be integrated into traditional finance has been on the rise among the institutional crowd in recent months as multiple heavy hitters have gotten involved with the technology.
In October, Bank of New York Mellon (BNY Mellon), America’s oldest bank, announced that it would begin allowing customers to hold their cryptocurrency assets alongside their traditional investments on the same platform – becoming the first large U.S. bank to do so.
The results of a survey commissioned by the bank found that 70% of the institutions surveyed indicated that they would increase their digital asset activity if services like custody and execution were available from recognized, trusted institutions. 88% signaled that they are still moving forward with their previously determined plans despite the market downturn.
The vast majority (91%) of institutional investors are interested in investing in tokenized products but are looking to do so in a safe and compliant manner, the survey found.
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BlackRock, the world's largest financial asset manager by AUM, has also increased its activities in the cryptocurrency space over the past year. In August, the firm partnered with Coinbase, the top U.S.-based cryptocurrency exchange, to provide greater access to cryptocurrencies for institutional investors beginning with Bitcoin (BTC).
August also saw BlackRock launch a private trust that offers institutional clients in the U.S. direct exposure to Bitcoin. The following month, the firm launched its iShares Blockchain Technology UCITS ETF, which was created to track the NYSE FactSet Global Blockchain Technologies Capped index. The fund was “designed for investors wanting exposure to a wide variety of companies that are involved in the development, innovation, and utilization of blockchain and crypto technologies.”
According to Joseph Chalom, global head of Strategic Ecosystem Partnerships at BlackRock, the firm's institutional clients "are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets."