Doubts regarding crypto remain among German banks, but there is a growing concern about missing out on a potentially game-changing development.
Despite persisting doubts among German banks, there is an increasing apprehension about losing out on a conceivably transformative advancement in the crypto space.
For an extended period, German banks disregarded the cryptocurrency industry as excessively speculative, perilous and inadequately regulated. Consequently, foreign institutions, neobrokers, and crypto fintech firms like Bitwala, Trade Republic, Bison App, and Bitpanda were predominantly accountable for rendering services such as trading and custody, business account management, tokenization, card issuance, and ATMs.
Trading cryptocurrencies directly at a German bank branch remained implausible. Not even the prominent online banks like Comdirect, Deutsche Kreditbank or ING permitted their customers to trade cryptocurrencies directly through a broker. Customers of these banks could only invest in Bitcoin (BTC) and other coins through certificates imitating the cryptocurrencies.
Nevertheless, the reluctance of German banks towards embracing crypto is gradually ceasing, with more institutions devising solutions to grant customers access to cryptocurrencies.
Will Bitcoin soon be available at 1,200 German banks ?
In March 2023, Deutsche WertpapierServiceBank (Dwpbank) achieved a significant milestone by launching its wpNex crypto trading platform, which provides access to the digital asset industry for 1,200 banks and savings banks in Germany. Nonetheless, it remains to be seen how well the associated banks will embrace the offering and whether it will meet expectations. Dwpbank CEO Heiko Beck disclosed to Cointelegraph that aside from pilot customer MLP Banking, they are also closely collaborating with DZ Bank, Germany's second-largest bank by assets held, about their proposal. He further added that there are additionally "a few other interested parties from the customer base", but he didn't reveal who they are.
Institutional clients are serviced by big commercial banks.
DWS, an asset management group predominantly owned by Deutsche Bank, is also seeking to enter the crypto industry by enabling investors to access digital assets. In April, DWS disclosed its plan to produce exchange-traded products of cryptocurrencies in the European market with Galaxy Digital. Moreover, DWS aims to employ this association to devise other digital solutions that will give investors entry to blockchain applications and digital assets.
In an April LinkedIn post, DWS CEO Stefan Hoops stated, "Undoubtedly, most crypto coins are either worthless or fraudulent." He added, "Regardless, we have faith in the future of a tokenized economy which will significantly disrupt the current market structure."
According to Hoops, the move stems from the belief that investor interest in digital assets persists unaltered. He further elaborated that instead of exhibiting schadenfreude when clients lose money dealing with dubious entities, "we should devise safe access to digital assets."
The recent partnership between DWS and Galaxy Digital indicates that one of Germany's major conventional financial institutions is intrigued by cryptocurrency assets, but this particular offering targets institutional investors such as foundations and companies, not retail investors.
Other traditional banks, namely Commerzbank and DekaBank, are in pursuit of a crypto custody license from BaFin, Germany's financial regulator. Their plans also cater to institutional clients and may not include prominent cryptocurrencies. For instance, DekaBank is already developing digital securities utilizing its own blockchain technology and intends to introduce a tokenization platform by 2024. Nonetheless, the German Savings Banks Association, which includes DekaBank, decided against providing cryptocurrencies to retail clients last year.
Deutsche Bank, like Commerzbank, prioritizes a crypto custody solution for significant institutional clients, allowing pension or investment funds to store their crypto with Deutsche Bank in the future. Nevertheless, the bank has no plans to offer crypto products or services to corporate or private clients anytime soon.