The German Federal Financial Supervisory Authority (BaFin) has granted Commerzbank a licence for the custody of crypto assets. This allows Germany's fourth largest bank to launch crypto custody services ahead of its established competitors.
In 2020, crypto custody services were introduced as a new financial service in the German Banking Act (KWG). Since then, companies need explicit permission from BaFin to offer crypto custody. To date, the financial regulator has only granted seven such licences to crypto exchanges and FinTechs. According to a press release, Commerzbank will become the eighth member of this exclusive circle and the first German universal bank with a crypto custody licence.
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The crypto plans of Commerzbank remain confidential
Commerzbank's exact plans remain confidential. What is known so far is that the custody licence will allow Commerzbank to hold cryptocurrencies such as Bitcoin (BTC) and Ether (ETH), as well as tokenised securities such as bonds issued on the blockchain. With a focus on crypto assets, Germany's fourth-largest bank can now build a new and broad range of services.
"With the issuance of the license, we have reached a significant milestone. It underlines our ongoing commitment to using the latest technologies and innovations, and provides the basis for supporting our clients in the area of digital assets." - Dr. Jörg Oliveri del Castillo-Schulz, Chief Operating Officer of Commerzbank
As a first step, the bank aims to provide institutional clients with a secure and reliable platform for the custody of crypto assets based on blockchain technology. The press release makes no mention of retail clients, and no further details of the forthcoming offering are disclosed.
German Competitors are hot on their trail
While Commerzbank is the first major financial institution in Germany with a crypto custody licence, larger competitors Deutsche Bank and DZ Bank have also submitted applications to BaFin. DZ Bank announced earlier this year that it aims to have a comprehensive crypto offering by the end of 2023, including integration with online banking and its app. The application for the crypto custody licence was submitted by DZ Bank at the end of July.
Germany's largest bank is on a similar path. In mid-June, Deutsche Bank also applied for a crypto custody license with BaFin. Overall, the financial institution with $1.4 trillion asset under management aims to increase corporate banking commission revenues by venturing into the novel industry. Just a few months later, Deutsche Bank entered into a partnership agreement with Swiss blockchain technology provider Taurus. The launch of crypto services, as also planned with numerous Swiss banks, is expected in early 2024.
