Deutsche Bank to offer cryptocurrency custody and trading

• The bank announced via a World Economic Forum report that it intends to integrate digital assets in traditional banking services.
• Deutsche recently projected that cryptocurrencies will conquer the mainstream within two years.

One of Europe’s largest banks is working on a digital asset custody and trading platform. Deutsche Bank announced that it projects the sector will surge to $24 trillion in the near future, making custody solutions a critical service. It is already developing the platform which it intends to launch in four stages.

Cryptocurrencies going mainstream

The German bank made the revelation in a December report by the World Economic Forum. Hidden deep inside the 38-page report, the announcement didn’t get much attention at the time. Cryptocurrency news outlet CoinDesk unearthed it recently, revealing that Deutsche was into cryptocurrencies before companies like Tesla got in.

Currently, tokenized versions of traditional assets account for only $5 billion, the report outlines. Over the next decade, this market could grow to $24 trillion, the bank projects. This will make digital asset custody solutions one of the most rapidly 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 bank, which is the largest in Germany, intends to introduce a securely connected bridge between digital assets and traditional banking services. It will allow users to manage their digital assets and fiat holdings on one platform. It plans on ensuring the safety of the digital assets through an institutional-grade storage solution.

Deutsche will launch the digital asset custody platform in four stages. In the first, it will provide custody for vetted digital assets for institutional investors. These include family offices, asset managers, digital funds and corporate funds.

In the second phase, it will allow clients to buy and sell digital assets. For this, the bank will partner with prime brokers and vetted exchanges. The third stage 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 allow the onboarding of third-party service providers. Lastly, it will offer issuance and trading capabilities.

Banking on Bitcoin

As the report revealed, Deutsche intends on making the platform a one-stop-shop for all its clients’ digital assets needs. It stated:

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 intends on launching 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 digital currencies 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 giants 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 giants offering cryptocurrency custody.

Just two days ago, the world’s largest custodian bank, BNY Mellon, announced it would launch a Bitcoin custody service. The bank, which has $41 trillion in assets under custody, will offer all the top cryptocurrencies.