Exterior view of Deutsche Bank branch

Deutsche Bank seeks digital asset custody license as part of expansion strategy

German banking giant Deutsche Bank AG (NASDAQ: DB) has confirmed plans to offer digital asset custody services to institutional clients after submitting an application with the country’s regulators.

Deutsche Bank AG executive David Lynne confirmed that the bank had taken steps to seek regulatory approval for the proposed offering. Lynne disclosed that the new offering is designed to increase the bank’s revenue stream in the face of rising macroeconomic uncertainty.

“We’re building out our digital assets and custody business. We just put our application into the Bafin for the digital asset license,” said Lynne.

Deutsche Bank AG has been leaning toward digital assets for the greater part of a year, with its investment arm DWS Group striking a partnership with Galaxy Digital (NASDAQ: BRPHF) to develop exchange-traded products (ETP). The investment group is currently embroiled in negotiations to acquire minority stakes in several digital currency firms.

Riding on the wave of its investment arm going all in on digital assets, Deutsche Bank AG sees providing custodial service as a gateway into the ecosystem. The earliest clue of the offering came during the World Economic Forum (WEF) in 2021, where the bank hinted toward an “institutional-grade hot/cold storage solution with insurance-grade protection.”

Gleaning from the details of the 2021 announcement, the bank’s proposed offering will be launched in stages and will eventually evolve to allow participants to trade digital assets in partnership with leading brokers.

Aside from custody and trading services, Deutsche Bank AG will be keen on offering ancillary services, including taxation, lending, and institutional valuation services. Other services to be offered by the bank include an open banking platform to engage third-party service providers and fund administrator services.

Per the WEF document, the bank will ensure a healthy revenue stream by billing custody and trading fees. The bank joins other German banks applying to the country’s regulator for digital currency permits as they look to explore new frontiers.

The debacle of banks and virtual currencies

While several banks are exploring the use of Web3 technologies, financial institutions are wary of providing banking services to digital currency firms following the collapse of Signature Bank, Silicon Valley Bank, and Silvergate.

“Crypto and Web3 start-ups are telling us they simply cannot get a business bank account,” said Coadec executive Marcus Foster.

Leading global banks have confirmed that they are closing the door on less established digital asset firms, only working with top firms after a “very rigid” vetting process.

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