German-based bank Commerzbank has obtained a digital currency custody license from local regulators, allowing it to offer a suite of services to institutional investors.
In its announcement, the banking giant stated that the move is the first in a long line of initiatives designed for the bank to explore digital asset offerings. The license comes after lengthy scrutiny by the German Federal Financial Supervisory Authority (BaFin), making Commerzbank the first “full-service” bank to secure a digital asset custody license.
Commerzbank says it will be proceeding with the launch of a new digital platform for institutional clients to meet their custody needs. However, Jorg Oliveri del Castillo-Schulz, Commerzbank’s COO, disclosed that the custody platform will still need to go through a inspection with German regulators before a mainstream launch.
“Now that we have been granted the licence, we have achieved an important milestone,” said Castillo-Schulz. “This highlights our ongoing commitment to applying the latest technologies and innovations, and it forms the foundation for supporting our customers in the areas of digital assets.”
For digital currency investors, Commerzbank’s planned foray into digital currencies is considered a boon for increased adoption, given the bank’s reach. Commerzbank has nearly 11 million small-business and private customers in Germany, settling over 30% of Germany’s foreign trade transactions.
German banking behemoth DZ Bank recently rolled out a digital asset custody platform tailored for institutional investors and built using blockchain technology. German financial regulators are warming up to digital assets, underscored by the flurry of approvals issued to traditional financial institutions.
“We assume that within the next ten years, a significant proportion of capital market business will be processed via distributed ledger technology (DLT)-based infrastructures,” said Holger Meffert, DZ’s head of digital custody. “In the medium term, we see DLT as a complementary technology to the established infrastructures in the existing capital market processes.”
Before DZ’s launch, Deutsche WertpapierService Bank (Dwpbank) rolled out its wpNex platform, offering digital currency services to over 1,000 German banks.
Urging service providers to play by the rulebook
Despite a seemingly positive stance toward digital currencies, German regulators have clarified that service providers must abide by the existing regulatory framework. In late 2022, BaFin took a swipe at Coinbase (NASDAQ: COIN) over anomalies with its corporate structure in Germany, urging the exchange to “ensure proper business organization.”
BaFin has since called for a global approach toward regulating digital assets following the collapses of several high-profile industry players.
“Now is the time for serious cryptocurrency regulation,” said BaFin Chair Mark Branson. “The most important point is that it doesn’t need just a European solution. It needs a worldwide solution.”
Watch: Bitcoin tech is all about unleashing potential for small people
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
Source: https://coingeek.com/commerzbank-secures-digital-asset-custody-license-in-germany/