Deutsche Bank, the largest financial institution in Germany, has taken steps to obtain a licence that would enable it to offer cryptocurrency custodial services. The bank has submitted an application to the Federal Financial Supervisory Authority (BaFin) in Germany to seek regulatory permission for this venture.
With assets worth $1.34 trillion, Deutsche Bank ranks as the ninth-largest bank in Europe. During a press conference on Tuesday, David Lynne, the head of the bank's commercial banking unit, confirmed this news, stating that they are expanding their digital assets and custody business. He further mentioned that their application for a digital asset licence has been submitted to BaFin. This move is part of a broader strategy to increase fee income within Deutsche Bank's corporate bank.
Deutsche Bank had previously hinted at its plans for cryptocurrency custodial services in late 2020 through its corporate bank divisions, but no specific timeline was provided for the launch of such services. The division was previously headed by Stefan Hoops, who was later replaced by David Lynne when Hoops joined DWS as the chief executive officer.
Earlier this year, Deutsche Bank released a research paper advocating for a more stringent regulatory framework around cryptocurrencies. The bank also referenced the downfall of the FTX exchange in its research as justification for tighter regulations. In February, Bloomberg reported that Deutsche Bank's asset management company, DWS Group, was considering investing in two German crypto firms as part of its growth strategy. The bank was reportedly in negotiations to acquire a minority stake in Deutsche Digital Assets and trading firm Tradias, owned by Bankhaus Scheich. However, there have been no updates on this matter since then.
Germany's financial regulators have generally displayed openness towards cryptocurrency companies. In 2019, the country's lawmakers amended the European Union's Fourth Anti-Money Laundering Directive, introducing a bill that allows crypto custody and trading services across all German banks and licensed institutions. BaFin has already issued four licences for cryptocurrency custody and granted provisional permits to 14 financial institutions by the end of last year. Coinbase Germany, a subsidiary of the American crypto exchange Coinbase, became the first company to receive a BaFin licence for operating a crypto custody platform in June 2021.
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