Deutsche Bank will manage cryptocurrencies, tokenized assets, and digital assets using Taurus' custody and tokenization technology.
According to a statement released by Taurus on Thursday, Deutsche Bank has joined with the Swiss cryptocurrency company Taurus to offer custody services for institutional clients' tokenized assets.
The cooperation will enable the bank to store tokenized versions of conventional financial assets as well as a limited number of cryptocurrencies for its clients according to a representative for Deutsche Bank.
The largest lender in Germany, Deutsche Bank, announced in June that it has sought a crypto custody license from BaFin, the nation's financial authority. The bank's plans for crypto asset custody have been known to the public since the beginning of 2021, when information regarding a prototype for digital asset custody surfaced in a World Economic Forum study.
Banking giant, Deutsche Bank AG, had submitted a regulatory application to be allowed to act as a crypto custodian in Germany. The action was taken shortly after the asset management giant BlackRock submitted a spot Bitcoin ETF filing with the SEC.
The bank stated that it was looking into cryptocurrency custody in February 2021 in order to be able to provide "institutional-grade hot/cold storage solution with insurance-grade protection."
The platform would eventually allow users to buy and sell digital assets through prime brokers and even offer services like taxation, valuation services, fund administration, lending, staking, and voting, among others. At the time, Deutsche Bank stated that the platform would be introduced gradually.
The introduction of regulations for companies that hold digital assets in Germany and, more broadly, the proposed Markets in Crypto-Assets Regulation (MiCA) framework in Europe are giving traditional finance firms the clarity they need to investigate the market for digital assets.
The goal is to create digital asset custody services for a wide range of digital asset types for corporate and institutional clients, according to Paul Maley, global head of securities services at Deutsche Bank.
“In the first instance, we will offer custody for selected crypto currencies and some stablecoins. We expect the first wave of activity to be around these selected cryptocurrencies and stablecoins. However, we see the opportunity in the broader emergence of tokenized financial assets,” Maley said in an email.
The succession of incidents of leading crypto firms last year, which left investors with huge losses and spurred lawmakers around the world to push for tighter regulation, has made it difficult for the crypto markets to recover. Nevertheless, a number of established financial institutions are exploring the application of blockchain, the technology that underpins cryptocurrencies, in the exchange and settlement of conventional financial assets.
Cryptocurrency custody services are provided by a number of banks, including Standard Chartered, BNY Mellon, and Societe Generale.
"As the digital asset space is expected to encompass trillions of dollars of assets, it's bound to be seen as one of the priorities for investors and corporations alike," said Paul Maley.
"Our focus is not just on cryptocurrencies, but supporting our clients in the overall digital assets ecosystem," Maley added.
U.S. regulators have cautioned banks to be alert for liquidity threats from clients with ties to cryptocurrencies.
In accordance with the "spirit and the letter of the regulations governing this asset class," Deutsche Bank is moving forward, according to Maley.
"Our product design, and the nature of custody for clients, will make sure that there isn’t the risk of contaminating the bank’s other activities," he said.