German Banks Adopting Crypto But For Institutional Investors

German Banks Adopting Crypto But For Institutional Investors

There are doubts regarding crypto among German banks. However, there is also a worry about whether they could be missing out on a game-changing opportunity. German banks have continued to ignore the crypto industry for quite some time.

The primary reason for that negligence was that the industry was highly volatile and unregulated. The gap was filled by crypto fintech companies and foreign institutions that were responsible for offering services such as business account management, card issuing, tokenization, and much more.

For German customers, trading through a local bank branch was not an option. Even the big names such as Comdirect, ING, or Deutsche Kreditbank gave services for facilitating customers to trade cryptocurrencies through a broker.

Therefore, the only way the clients of these banks could trade cryptocurrencies and Bitcoin BTC was via certificates replicating the digital assets.

Will German Banks See Bitcoin Soon?

Deutsche WertpapierServiceBank (Dwpbank) took a major initiative in March this year by introducing its crypto trading platform, wpNex. It allows around 1,200 commercial and savings throughout Germany to access the digital asset industry.

But, it is still a waiting game to see how well the affiliate banks would be received and whether or not they will live up to the hype. Dwpbank CEO, Heiko Beck, said “Apart from our pilot client MLP Banking, we’re also in touch with other banks, including DZ bank regarding our offer.”

Major Commercial Banks Helping Institutional Investors

Asset management group DWS is also looking to enter the crypto industry by allowing investors to explore digital assets.

The bank is owned by and DWS announced in April that it was working on different cryptocurrencies products with the Galaxy Digital to enter the European market.

Furthermore, DWS also plans on using its partnership to create other digital solutions that will allow investors to learn about digital assets and blockchain applications.

Stefan Hoops, DWS CEO, said that “There is no doubt that most coins in the crypto market are fraudulent or futile,” adding “But, we still think that the tokenized economy in the near future has the power to disrupt the existing market structure substantially.”

According to Hoops, the investor interest in cryptocurrencies is persistent and he further commented on it, “We should focus on building safe access to digital assets instead of being atrociousness where our clients end losing more money because of fraudulent [entities]”

While this recent partnership between Galaxy Digital and DWS does indicate that Germany’s biggest traditional financial institutions are keen on crypto products, this service is only limited to institutional clients — like corporations and companies — and not retail investors.

Cooperative Banks Offering Limited Services

A bank with an international network like the Deutsche Bank might find it challenging to introduce a digital asset offering because of the different regulatory jurisdictions in which it has its operations.

On the other hand, local banks like the volksbanken and raiffaisenbanken have more leverage since they can operate within the German jurisdiction without having to worry about compliance.

Their operations are locally based and they have a much simple business model that focuses on mobilizing the deposits and then giving them as loans to households or businesses.

For instance, the National Association of German Cooperative Banks is focusing on giving crypto custody and trading to cooperative banks so that they can benefit from the market demand, even though the cryptocurrencies are highly-volatile investment products.

Whether or not volksbanken let the customers trade crypto is a decision that the institutions would have to make, which are independent legal corporations. While these are locally based, it shows that local banks are working towards broader crypto adoption.