Deutsche Bank Switches On Bitcoin Custody for Paying Clients

Bitcoin Magazine

Deutsche Bank Switches On Bitcoin Custody for Paying Clients

Deutsche Bank has switched on its digital asset custody service for paying clients, the German lender said Wednesday, letting institutions and corporations in Europe hold bitcoin with the country’s largest bank less than two months after it first unveiled the plan.

The bank announced the service on Sept. 16, saying it would go live with first clients this year once regulators signed off. It now supports bitcoin and ether, along with the USDC, EURC and EURAU stablecoins, according to its product page.

Under the setup, Deutsche Bank manages the wallets and private keys on behalf of clients, who can store the assets and transfer them to third parties. The bank pitched that as a way for clients to skip building and maintaining their own custody infrastructure.

“In the medium term we aim to deliver a fully integrated, regulated ecosystem that supports the custody, tokenisation, and settlement of digital assets,” said Paul Maley, global head of trust and securities services at Deutsche Bank.

The bank did not name its first clients, say how many have signed up or disclose what it charges to hold the coins. The service is aimed at institutional and corporate clients, not retail customers.

The product page describes private keys stored in hardware security modules, a choice of warm and cold storage, multi-factor authentication, segregation of client assets and a customizable approval process for client transfers. Clients reach the service through Autobahn, Deutsche Bank’s multi-channel gateway, or its Corporate Bank portal.

The service is booked out of Deutsche Bank AG in Frankfurt and is available in Germany, with cross-border servicing across Europe through passporting. The bank lists institutional investors, multinationals and corporates, governments and sovereigns, and wealth managers as target clients, and it describes the offering as compliant with the European Union’s MiCA crypto rules.

For now the menu is narrow. Deutsche lists custody, transfers and internal moves between warm and cold storage as its initial services, with “further capabilities planned.” The September release said the asset list may grow with client demand and that tokenized financial instruments are on the roadmap.

It also carried a warning familiar to anyone in bitcoin: crypto assets held this way are not covered by a deposit-guarantee scheme like the one that protects eligible bank deposits.

Alongside the launch, Deutsche Bank signed a memorandum of understanding with Deutsche Asset Management, the money manager it mostly owns that was known until recently as DWS. The agreement is meant “to explore comprehensive commercial and technical collaboration opportunities in the digital asset space,” the bank said.

The firms plan to look at tokenized money market funds, crypto exchange-traded commodities and stablecoins built around the new custody platform, and Deutsche Asset Management’s chief product officer, Manfred Bauer, said it plans to launch a tokenized money market fund, according to a report. The asset manager oversaw about €1.22 trillion as of Sept. 30.

Deutsche Asset Management already backs AllUnity, the joint venture that issues EURAU, one of the three stablecoins the bank’s custody service supports.

Deutsche Bank has also told Reuters it wants to bring the service to Asia. In October, the bank’s corporate banking chief said the lender planned to expand the platform into the region next year.

The launch puts Deutsche Bank alongside a growing list of large banks that now hold bitcoin for clients. BNY Mellon became the first major U.S. bank to offer digital asset custody in 2022, and this year Standard Chartered moved to offer custody in Singapore while South Africa’s Absa became the first bank on the continent to custody bitcoin.

In the U.S., Coinbase this week won a full federal trust charter from the OCC, another sign that custody is becoming a regulated banking business on both sides of the Atlantic.

The timing is not ideal for new money. Bitcoin traded near $73,900 Wednesday morning, close to its lowest level since August after a hotter-than-expected U.S. inflation report on Tuesday.

This post Deutsche Bank Switches On Bitcoin Custody for Paying Clients first appeared on Bitcoin Magazine and is written by Micah Zimmerman.