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Deutsche Bank Dives into Crypto Custody: A Sign of Changing Times in Banking

Deutsche Bank, a financial titan with assets nearing $1.5 trillion, has announced its foray into crypto custody services. This 153-year-old banking giant now aligns with other banking stalwarts like Standard Chartered, BNY Mellon, and Societe Generale, all of which have embraced crypto custody solutions.

Moreover, Deutsche Bank has publicized its alliance with Swiss crypto firm Taurus. This collaboration is set to deliver crypto custody services and delve into tokenized assets. Paul Maley of Deutsche Bank emphasized, “As the digital asset space is poised to engulf trillions in assets, it’s inevitably becoming a priority for investors and corporations. Our aim transcends cryptocurrencies; we’re dedicated to supporting our clientele in the expansive digital asset ecosystem.”

Interestingly, Deutsche Bank had previously invested in Taurus during its $65 million Series B fundraising round in February. Additionally, this week unveiled HSBC’s partnership with crypto custody tech firm Fireblocks, known for its prior associations with banking leaders like BNY Mellon and BNP Paribas.

However, there’s a twist. Despite the bank’s recent moves, a spokesperson clarified that Deutsche Bank isn’t immediately diving into crypto trading. This statement seems at odds with a 2020 World Economic Forum paper. Furthermore, as of June, the bank had pursued a crypto custody license in Germany.

Historically, Deutsche Bank has maintained a cautious stance on crypto. Ulrich Stephan, the bank’s chief strategist, once remarked, “I would simply not recommend [Bitcoin] to the everyday investor.” Yet, the bank has consistently lauded blockchain, advocating its advantages in numerous articles since 2017.

Banks’ evolving perspectives on crypto are indeed intriguing. In February 2019, banking giants like Bank of America and JPMorgan Chase & Co. voiced concerns about crypto, with the latter’s CEO, Jamie Dimon, even branding Bitcoin as a “fraud.”

However, the crypto landscape has its pitfalls. Last year witnessed the collapse of Terraform Labs’ TerraUSD (UST), erasing billions from the market value. This was further intensified by FTX’s implosion in November, ushering in a “crypto winter” that has since made traditional finance entities wary.

A disturbing event in March spotlighted a banking crisis in the US, with banking stocks taking a hit. Three embroiled banks had ties to crypto, further denting crypto’s image. Silvergate Capital, the most crypto-friendly bank, had been a significant lender in the sector.

Today, major financial institutions remain on the fence, assessing crypto-associated risks. Just recently, the International Monetary Fund (IMF) rolled out a strategy to mitigate crypto’s adverse impacts on the global economy, underscoring the challenges crypto still faces in gaining universal acceptance.

 

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.