Deutsche Bank offers Crypto Custody and Trading Services: The new trend?
Sep 23, 2023
Deutsche Bank, one of the largest banks in Europe, is planning to offer crypto custody and trading services to its institutional clients by the end of 2023. The bank has partnered with Taurus, a Swiss digital asset infrastructure provider, to build a platform that will allow clients to buy, sell, and store various crypto assets, including bitcoin, ether, and tokenized securities. The bank aims to provide a secure and regulated gateway for its clients to access the emerging crypto market and benefit from its growth potential.
The crypto market has seen a rapid increase in adoption and innovation in recent years, reaching a total market capitalization of over $2 trillion in 2021. Crypto assets offer various advantages over traditional assets, such as higher returns, lower fees, faster transactions, and greater transparency. However, they also pose significant challenges and risks, such as volatility, security breaches, fraud, and regulatory uncertainty. Therefore, institutional investors need reliable and professional partners to help them navigate the complex and evolving crypto space.
The move by Deutsche Bank is part of a broader trend of traditional financial institutions embracing crypto as an asset class and a technology. Other major banks, such as US Bank, BNY Mellon, and State Street, have also announced plans to launch or expand their crypto custody and trading services in response to growing demand from their clients. Crypto custody is a key service that enables institutional investors to safely store their digital assets with a trusted third party, while complying with regulatory and legal requirements.
With these transitions by banks becoming more frequent, are we beginning to see a transition where banks are starting to support cryptocurrency because they do not want to be left behind? To quote Mahatma Gandhi, “First they ignore you, then they laugh at you, then they fight you, then you win.” Where are we at in this statement? Personally, I still feel that we are in the “Then they fight you stage”, but some investment firms, banks, and other financial institutions are beginning to see that bitcoin and other cryptocurrencies are not going away. If you can't beat em, join em.
When the internet became a big deal, many companies started to incorporate or utilize the internet to reshape existing business models. One company that did this was Netflix and one company that did not do this was Blockbuster. Blockbuster was a video rental company that dominated the industry for decades, but failed to survive the digital transformation of the entertainment market. Some of the main reasons why Blockbuster failed and filed for bankruptcy were its reliance on late fees as a source of revenue, its lack of adaptation to the changing customer preferences and technological trends, its rejection of a partnership offer from Netflix in 2000, its excessive investment in its physical stores and weak online presence, its fierce competition from Netflix, Redbox, Amazon, and other digital platforms, and it's late and inferior entry into the streaming market. Blockbuster rejected and resisted change, and it cost them everything.
If financial institutions are not forward-thinking and cryptocurrency technology is here to stay, then many of these companies will be left behind like Blockbuster.