Commerzbank is the first major bank in Germany to receive a crypto custody license

2023-11-15 14:44:31

Commerzbank is the first universal bank to receive a license from the German financial regulator Bafin to hold digital securities such as the cryptocurrencies Bitcoin and Ether as well as bonds and funds issued via a blockchain. So far, Bafin has granted eight such crypto custody licenses, for example to subsidiaries of American companies such as Coinbase and Bitgo or to fintechs such as Upvest, Tangany and Bitpanda. Almost all major banks and investment companies in Germany are working on a crypto custody offering, and many such as Deka and DZ Bank have also applied for a license from Bafin. But it often takes more than a year to receive them. That’s why the small private bank Hauck & Aufhäuser bought Kapilendo in 2021, a fintech that already had a crypto custody license.

Commerzbank has now received a crypto custody license on its own, ahead of its major rival Deutsche Bank and DWS, which is also working on a solution for the custody of digital securities. Commerzbank remained tight-lipped about its future plans on Wednesday. As a first step, it aims to provide its institutional customers, such as insurers, pension funds and investment companies, with a “secure, regulatory-compliant and reliable platform for the safekeeping of crypto assets based on blockchain technology,” it said short press release from Commerzbank. There is no mention of private customers.

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Recently, the fund company Union Investment bought Metzler Bank fund shares for the first time using a blockchain provided by this bank. Digital bond issues from Siemens and KFW, for example, have been around for a long time. The next class of securities could be digital investment certificates, which are very popular with private customers. What they all have in common is that the transactions are cryptographically encrypted and stored so that they are accessible to all previously selected participants. This is also referred to as a decentralized cash register (Distributed Ledger Technology, DLT). One advantage: Securities can be traded, booked and stored quickly and without the need for Deutsche Börse and its custodian Clearstream. The value chain is changing.