Deutsche Bank, which is One of Europe’s largest banks, announced that it is working on a cryptocurrency custody and trading platform. Deutsche Bank said that it projects the sector will increase to $24 trillion in the short term future, making custody solutions a critical service. It is already developing the platform which it intends to launch in four levels.
Cryptocurrencies going mainstream
The German bank made the revelation in a December report by the World Economic Forum. As it was hidden deep inside the 38-page report, the announcement didn’t get much attention at that time. Cryptocurrency news outlet CoinDesk unearthed it recently, saying that Deutsche was into cryptocurrencies before companies such as Tesla got in.
Currently, tokenized versions of traditional assets account for only $5 billion, the report says. Over the next 10 years, this market could grow to $24 trillion, the bank projects. This will make digital asset custody solutions one of the most fast sought-after services.
Deutsche Bank aims to develop a fully integrated custody platform for institutional clients and their digital assets providing seamless connectivity to the broader cryptocurrency ecosystem.
The largest bank of Germany, aims to introduce a securely connected bridge between digital assets and traditional banking services. It will allow clients to manage their digital assets and fiat holdings on one platform. It aims on ensuring the safety of the digital assets through an institutional-grade storage solution.
Deutsche will launch the digital asset custody platform in four levels. First of all, it will provide custody for vetted digital assets for institutional investors which include family offices, asset managers, digital funds and corporate funds.
In the second level, it will allow users to purchase and sell digital assets. For this, the bank will partner with prime brokers and vetted exchanges. The third level will see the bank offer value-added services such as taxation, staking and voting, lending and fund administration. It will also provide an open-banking platform to enable the onboarding of third-party service providers. Lastly, it will provide issuance and trading capabilities.
Banking on Bitcoin
As the report said, Deutsche intends on making the platform a one-stop-shop for all its clients’ digital assets needs. It noted:
“The platform will be embedded with a full suite of regulated banking services, including KYC/AML, compliance, settlement and more. Intuitive UX and CX will be crucial. Deutsche Bank will help users to focus on what’s important – their investment decisions. This platform will focus on simplifying the customer experience and design implementation as a means of creating a differentiated product.”
The bank has already completed its proof of concept and aims to launch the product this year.
Deutsche, which is Europe’s eighth-largest bank with €1.3 trillion in assets under management, has been pro-digital currencies for some time now. In its report last month, the bank projected that cryptocurrencies could be mainstream in the next two years. It singled out China’s digital yuan and Facebook’s Libra as some of the most promising projects. The yuan would be available to 1.5 billion Chinese citizens while Libra would be available to 2.5 billion Facebook users.
…Yet, if the growth in blockchain wallet users continues to mirror that of internet users, then by the end of the decade, they will number 200 million, quadruple the current level. This will be encouraged by governments, banks, corporates, and payment providers who all stand to benefit from the digitalisation of payments.
The crypto custody race
In entering the cryptocurrency custody sector, Deutsche joins other global financial firms that have already announced or launched similar products. The largest bank in Southeast Asia, Singapore’s DBS announced a custody solution a month ago. Spain’s second-largest bank BBVA, Netherlands’ largest bank ING and the Swiss Stock Exchange are some of the firms offering cryptocurrency custody.
Just two days ago, the world’s largest custodian bank, BNY Mellon, announced it would launch a Bitcoin (BTC) custody service. The bank, which has $41 trillion in assets under custody, will provide all the top cryptocurrencies.