German financial giant Deutsche Bank recently applied for a license for digital asset custody service.
Deutsche Bank, one of the largest financial institutions in Germany, wants to advance its custody services for digital assets. To do this, the lender requested a custody license from the Federal Financial Supervisory Authority (BAFIN).
This request is carried out in response to the growing demand for custody services by the entity’s clients. Other financial institutions in the country would be on the same footsteps, forcing Deutsche Bank to act to prevent clients from contemplating leaving.
“We have just submitted an application to BAFIN for the license,” said David Lynne, director of the institution’s commercial banking unit. This new advance is part of a broader strategy by the bank to increase fee income, the executive explained, quoted by Bloomberg.
Deutsche Bank Wants to Expand its Services Through Custody of Digital Assets
If licensed, the German lender will be able to offer digital asset custody services to its clients. With this, the rumors of the enthusiasm of the directive in this sector that grows in popularity are confirmed. Thus, important institutions are flirting with the crypto market.
In simple words, the bank’s clients will have the opportunity to store various types of assets from the virtual area. These include cryptocurrencies and other types of tokens, which could be in registered, secure and regulated accounts.
Said license request is made under the BAFIN regulatory framework. It is the agency in charge of supervising the financial market of the European country, responsible for ensuring that all financial institutions comply with the established rules and regulations.
According to Bloomberg, the German bank has been working on its own digital asset custody platform since 2020. However, this initiative was not accompanied by a tentative date to launch any product, until now, with the license application.
With this step, the world of digital currencies seems to be moving towards a more secure and regulated environment. So far, one of the main fears among investors is that putting capital into assets like cryptocurrencies is fraught with great risks.
Ensuring the Safety of Client Funds
With the possibility of providing custody of digital assets, the German bank takes a step in the fight against fraud. In that sense, client funds would not end up in the hands of platforms that could be fraudulent, as in the case of FTX. Likewise, the institution ensures that deposits do not leave their accounts.
The growing popularity of cryptocurrencies causes many people to withdraw their savings from banks and place them in exchanges. In simple words, traditional banking faces an existential dilemma in which they must adapt to the new needs of customers. Thus, Deutsche becomes one of the pioneering institutions in offering these services that include crypto market assets.
It is to be hoped that this is the first of successive requests by other lenders. The trend towards the use of cryptographic assets and tokens seems to be very close despite the immaturity of that market. By turning to this new form of finance, big banks are helping regulatory efforts to prevent crimes like money laundering.
The coverage of services such as the custody of digital assets can have both positive and negative sides.
By Audy Castaneda
