Deutsche Bank to offer crypto custody, prime brokerage

Deutsche Bank has joined the growing ranks of large financial institutions exploring cryptocurrency custody, with aspirations to offer hightouch services to hedge funds that invest in the asset class.

The Deutsche Bank Digital Asset Custody prototype aims to develop "a fully integrated custody platform for institutional clients and their digital assets providing seamless connectivity to the broader cryptocurrency ecosystem," according to a little-noticed report by the World Economic Forum, host of the annual gathering of muckety-mucks in Davos, Switzerland.

In a passage buried on page 23 of the December 2020 report, Germany's largest bank says it plans to create a trading and token issuance platform, bridging digital assets with traditional banking services, and managing the array of digital assets and fiat holdings in one easy-to-use platform.

By signing up, you will receive emails about CoinDesk products and you agree to our terms & conditions and privacy policy. Big banks are now announcing plans to enter crypto custody on an almost daily basis, with Bank of New York Mellon, the world's largest custodian bank, joining the party earlier this week.

U.S. banks were given some regulatory clarity thanks to last year's interpretation letters from the Office of the Comptroller of the Currency. In Germany, firms are queuing up to get their hands on special crypto custody licenses from the country's regulator, BaFIN.

Deutsche, the world's 21st largest bank, said it aims to "ensure the safety and accessibility of assets for clients by offering an institutionalgrade hot/cold storage solution with insurance-grade protection." No specific cryptocurrencies or tokens are mentioned.

The digital asset custody platform would be launched in stages. It would eventually provide clients with the ability to buy and sell digital assets via a partnership with prime brokers (which act sort of like concierges for hedge funds), issuers and vetted exchanges.

The bank says it would also provide "value-added services such as taxation, valuation services and fund administration, lending, staking and voting, and provide an open-banking platform to allow onboarding of thirdparty providers."

The service would be aimed at asset managers, wealth managers, family offices, corporates and digital funds, the bank said.

In terms of a business model, the bank would start out collecting custody fees, it said, later charging fees for tokenization and trading.