Banks eye crypto potential as first of the German financial institutions moves into the arena

Table of Contents

Generally seen as solidly against crypto, banks are now perhaps seeing the futility of going along with the suppression of the crypto sector, and now the first of the German banks, Commerzbank, has entered the crypto custody niche.

Commerzbank blazes the path into crypto

Commerzbank is the first full-service bank in Germany to be granted a crypto custody licence in what is a particularly difficult jurisdiction in which to do so. 

BaFin, the German regulatory body, has set the bar high for companies wishing to interact with digital assets, and a very stringent process for obtaining a licence has been found to be a step too far for such as the likes of crypto exchange Binance, which was denied by the German regulator earlier this year in June.

However, banks are already deeply embedded in how the traditional financial system moves and works, and finding common ground with a financial regulator from the same background appears to make the application process that much more doable.

Banks must adapt

The banking industry must be extremely wary of the crypto industry, in that its demise could potentially come from this direction. How unwieldy, unprofitable, and slow-moving banks cope with the lightning-fast crypto sector over the next few years remains to be seen.

It might be argued that only government intervention and what some see as a harsh and suppressive regulatory stance on crypto are the only factors that give banks any kind of chance.

With some crypto projects pushing out the boundaries of decentralisation, having realised that this is the only way out of a regulatory strait jacket, more conduits are opening for those wishing to park their money in higher yielding crypto products.

A new source of profit

At the end of the day, banks do need to make money, and with many of them under water due to unwise bond purchases and commercial real estate loans, there is a need for them to explore new sources of potential profit, and the crypto custody niche is certainly one of these.

Where Commerzbank has ventured, many more are likely to follow suit. Crypto was always meant for the beaten down citizenry as a way to hold private money outside of the fiat monetary system. However, as large financial institutions start to taste the advantages of finance within crypto, this sector is likely to see a greater slide towards big money and away from the common investor.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.