Deutsche Bank takes another step into the world of blockchain by seeking a license to establish a crypto custody service. This move aligns with the bank’s goal of enabling users to securely store digital assets, including cryptocurrencies, similar to existing custody-based exchanges.
As we enter Q2 2023, numerous traditional institutions, like the $1.4 trillion German asset management institution, are increasingly intrigued by the digital economy and its connection to cryptocurrencies. Deutsche Bank aims to enhance its revenue from digital assets through its investment arm, the DWS Group.
David Lynne, Head of Corporate Bank, explained that the application to BaFin was submitted in order to develop the bank’s “digital assets and custody business.”
BaFin, which stands for Bundesanstalt für Finanzdienstleistungsaufsicht, is the Federal Financial Supervisory Authority in Germany. It serves as the primary regulatory authority responsible for supervising banks, financial service providers, insurance companies, and securities trading in Germany.
BaFin, established in 2002 through the merger of three supervisory authorities, aims to create a unified regulatory framework. Its key objectives include ensuring the stability and integrity of Germany’s financial system, protecting investors, and fostering confidence in the financial markets.
BaFin oversees various financial activities such as banking supervision, securities and capital markets regulation, insurance supervision, and enforcement of financial laws.
With the authority to grant licenses, conduct inspections, monitor compliance, investigate violations, and impose penalties, BaFin plays a crucial role in maintaining financial stability. It also collaborates closely with domestic and international regulatory bodies to promote cooperation and uphold regulatory standards.
Blockchain and Deutsche Bank
It enables various stakeholders, including fund managers and custodians, to launch and manage digital funds seamlessly in one centralized location. Additionally, investors can utilize the platform to access a wide range of funds from different fund managers.
In 2019, Deutsche Bank joined the Interbank Information Network (IIN), led by JPMorgan Chase. The IIN was established with the aim of bringing global banks together to facilitate the sharing of information related to global payments using blockchain technology, specifically the mutually distributed ledger technology that underlies cryptocurrencies.