Deutsche Bank has announced a new partnership with Taurus, a Swiss cryptocurrency firm, in order to provide digital assets and tokenized financial instruments custody services for institutional clients. This marks a major step forward for the bank, as it will now be able to hold a limited selection of cryptocurrencies and tokenized versions of traditional financial assets on behalf of its customers.
Despite expressing intentions to offer crypto trading in a 2020 World Economic Forum paper, Deutsche Bank has clarified that it currently does not have plans to engage in cryptocurrency trading.
The cryptocurrency market has been struggling with a number of high-profile collapses of leading cryptocurrency firms in the past year, resulting in losses for investors and prompting calls for increased regulatory oversight. At the same time, several mainstream financial institutions such as Standard Chartered, BNY Mellon, and Societe Generale are exploring the potential application of blockchain technology, the technology behind cryptocurrencies, for trading and settling conventional financial assets.
Paul Maley, Deutsche Bank’s global head of securities services, pointed out the growing importance of the digital asset space, expected to include trillions of dollars in assets, and said that it is a priority for both investors and corporations. According to CoinGecko data, the cryptocurrency market is currently valued at approximately $1.1 trillion, down from its peak of just over $3 trillion in November 2021. Maley stated that the bank’s focus extends beyond cryptocurrencies, as they aim to support clients across the broader digital assets ecosystem.
In response to US regulators’ concerns about potential liquidity risks associated with cryptocurrency activities, Maley commented that Deutsche Bank is proceeding cautiously, in line with the spirit and regulations governing this asset class. He added that their product design and custody solutions have been structured to minimize the risk of impacting the bank’s other activities.