In a bold move signaling its entry into the digital asset space, Deutsche Bank AG, Germany’s leading asset manager with a total value of $1.4 trillion, has applied for a regulatory license to operate a custody service for digital assets, including cryptocurrencies. The application was submitted to Germany’s securities watchdog, BaFin, as announced by David Lynne, the head of Deutsche Bank’s commercial banking unit, during a conference on Tuesday.

Deutsche Bank applied for crypto custody

This strategic initiative forms part of Deutsche Bank’s broader plan to enhance fee income within its corporate banking division. It also aligns with the efforts of DWS Group, Deutsche Bank’s investment arm, to expand revenue streams associated with digital assets.

While Deutsche Bank had previously expressed interest in introducing digital asset custody, the exact timeline for the service’s launch remained undisclosed until now. Stefan Hoops, former head of the corporate banking division, initially hinted at the development in late 2020, and David Lynne assumed leadership of the division a year ago, taking over from Hoops when he became CEO of DWS Group.

By applying for a digital assets license from BaFin, Deutsche Bank aims to secure regulatory permission to offer custody services for a wide range of digital assets, including cryptocurrencies. This move marks a significant step for the bank in embracing the growing influence of cryptocurrencies and digital assets in the financial landscape.

During a conference on Tuesday, David Lynne, who heads bank’s commercial banking unit said:

“We’re building out our digital assets and custody business. We just put our application into the Bafin for the digital asset license.”

Deutsche Bank’s decision to venture into the digital asset custody space demonstrates a shift in its perception of cryptocurrencies. In contrast to its research reports from earlier in 2020, which deemed bitcoin “too volatile” and an unreliable store of value, the bank now recognizes the potential of digital assets and aims to leverage this market opportunity.

As the financial industry witnesses an increasing interest in digital assets, Deutsche Bank’s foray into crypto custody services signals its commitment to staying ahead of the curve and catering to the evolving needs of its clients. The regulatory license, once obtained, will grant the bank the authority to provide secure and compliant storage solutions for digital assets, bolstering its reputation as a trusted custodian in the emerging crypto space.

Last week, BlackRock submitted an application to the Securities and Exchange Commission (SEC) for a Bitcoin ETF.

With Deutsche Bank’s extensive reach and influence in the global financial market, its entry into crypto custody is expected to have a profound impact on the broader adoption and acceptance of digital assets within traditional banking and institutional circles.