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Germany’s Biggest Private Bank Explores The Joy Of Crypto

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Deutsche Bank
Deutsche Bank

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The asset management arm of Deutsche Bank AG is apparently in discussions to invest in two German cryptocurrency platforms. The Bloomberg report on Feb 8, citing two people familiar with the matter, noted that the DWS Group CEO, Stefan Hoops, held several discussions amid the efforts to revive growth. The CEO is considering buying a minority stake in Deutsche Digital Assets, a Frankfurt-based crypto exchange-traded products provider.

Another potential investment is a market-making firm owned by Bankhaus Scheich, Tradias, a traditional finance market maker.

The revolve to crypto comes as Hoops attempts to restore DWS’s reputation after claims of greenwashing and tax fraud in investigations by the US and German authorities. It is an excellent move since various governance scandals, including the demise of the giant crypto exchange FTX in November, rocked the crypto ecosystem.

However, Hoops has been an open supporter of new technologies. In December, he outlined the bank’s blockchain and digital currencies strategy. These strategies included a plan to Build-or-buy multiple specific blockchain-related services to lay the foundation for the digital future. In a recent earnings call, the executive noted that DWS has “commenced assessing strategic partners and due diligence.” These activities are conducted on potential targets where it expects to gain new capabilities, including digital assets.

However, Hoops stated that the downturn in digital asset prices could yield “captivating opportunities” for DWS.

Deutsche’s Bank efforts in crypto

As per the Deutsche Digital Assets web, the platform facilitates investors’ exposure to crypto assets via several investment vehicles. They vary from passive to actively managed funds and white-labeling services for asset managers.

Nonetheless, the potential investment firm Tradias is an over-the-counter (OTC) trading firm for crypto and security tokens created by Bankhaus Scheich in 2020. The platform’s significant goal is to enable the provision of crypto loans and liquidity services.

However, in May 2022, the Frankfurt prosecutors raided the DWS and Deutsche Bank offices. These came after the prosecutors gathered “enough evidence” that ESG regulations were applied only to a minority of assets, contradicting to their marketing allegations.

However, Germany ranks among the most favorable crypto economies. It is a friendly tax regime for long-term crypto bearers. The country charges zero capital gains on the sale of crypto held for over a year.

The institutions’ interest in blockchain technology

Apart from DWS, several other institutions have shown interest in blockchain technology and ways it could be integrated into traditional finance. In recent months, various moguls have connected with the technology. In October last year, America’s oldest bank, the Bank of New York Mello (BNY Mellon), revealed its aim to allow customers to hold their cryptocurrency assets through their traditional investments on the same platform.

Notably, the New York financial regulators approved the BNY to commence receiving select customers’ Bitcoin and Ether deposits. According to the survey conducted by the BNY bank, the results indicated that 70% of the institutions would increase their digital asset activity. Another 88% of institutions showed they were glued to their previously determined plans regardless of the market downturn. However, a great majority of institutions, that is 91%, signaled that they are interested in investing in tokenized products in a safe and compliant way.

Another financial asset manager by AUM, BlackRock, has shown interest in the crypto industry over the past years. In August 2022, the US.,-based crypto exchange Coinbase revealed its partnership with the firm to facilitate greater access to cryptocurrencies to institutional investors, commencing with Bitcoin (BTC). In the agreement, the BlackRock Aladdin institutional investment company users could sign up for Coinbase Prime to access crypto custody, trading, reporting services, and prime brokerage.

BlackRock Wades deep into the realm of crypto

However, this was not the end of BlackRock in the crypto space. In that same month, BlackRock launched a private trust that directly exposed institutional users in the US to BTC. According to the announcement, the trust enabled track of the performance of bitcoin, and fewer expenses and liabilities of the trust, as part of the platform’s commitment to providing customers with access to their choice of investment opportunities.

Nonetheless, in September, the platform launched an ETF for European investors. The iShare Blockchain Technology UCITS ETF was designed to trace the NYSE FactSet Global Blockchain Technologies pegged Index. However, according to BlackRock’s website, the fund was designed for investors wanting exposure to various firms linked to developing and utilizing blockchain and crypto technologies.

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