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(Kitco News) - German investment bank Deutsche Bank AG is the latest large financial institution looking to get more involved in the cryptocurrency space and has applied with BaFin, Germany’s financial regulator, seeking permission to operate a custody service for digital assets.
According to a report from Bloomberg, David Lynne, Deutsche Bank’s Head of Corporate Bank, announced the firm’s move towards crypto on Tuesday, saying, “We’re building out our digital assets and custody business. We just put our application into the BaFin for the digital asset license.”
BaFin is tasked with monitoring companies in Germany that provide services related to crypto assets, including crypto trading platforms, crypto ATM operators and companies offering crypto custody services. A license from BaFin allows crypto firms to legally advertise and offer their services in the German market.
Cryptocurrency custody services refer to the secure storage and management of digital assets on behalf of institutional and individual investors and include the storage of private keys in highly secure offline or online storage solutions.
This move towards crypto custody is part of a broader strategy to increase fee income at Deutsche Bank’s corporate bank, Lynne said, and aligns with efforts by DWS Group – Deutsche Bank’s investment arm – to increase the income generated by digital asset products.
In February, DWS revealed that it was in talks to invest in two German cryptocurrency firms as part of the bank’s efforts to revive growth. The bank was exploring the acquisition of a minority stake in Deutsche Digital Assets, a Frankfurt-based provider of crypto exchange-traded products, and Tradias, a market-making firm owned by Bankhaus Scheich.
That same month, it was also disclosed that Deutsche Bank took part in a $65 million Series B funding round for Geneva-based Taurus Technology, a digital asset infrastructure provider for European financial institutions. Taurus plans to use the funds to support its growth strategy, hire top engineering talent, and expand its presence across Europe and the United Arab Emirates.
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In April, DWS announced a partnership with U.S.-based Galaxy Digital to launch “a comprehensive suite of exchange-traded products (ETPs) on certain digital assets in Europe” and explore “other digital asset solutions.” The partnership made DWS Galaxy’s “exclusive ally for cryptocurrency ETPs in the European market.”
“Galaxy's asset management unit and DWS will work together to provide European investors access to the USD ~1 trillion digital assets market through cost-effective investment solutions that are easy to access via traditional brokerage accounts,” the press release said. “For DWS, this alliance fulfills a key priority to develop comprehensive digital solutions, unlocking investor access to the ever-growing blockchain and digital assets universe.”
“This alliance brings together two firms with unparalleled collective experience in building and pioneering innovative investment solutions across both traditional and digital asset markets,” said Fiona Bassett, Global Head of Systematic Investment Solutions at DWS. “As we see increasing client interest in digital assets and the need for secure access, our shared education-first approach and commitment to providing clients with access via well-known and trusted investment vehicles will enable us to build thoughtfully constructed and thoroughly researched products.”
Deutsche Bank has been looking to provide digital asset custody services since late 2020, despite releasing a research report earlier in the year that said Bitcoin is “too volatile” to be a “reliable” store of value.
