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DZ Bank to launch crypto trading pilot program

DZ Bank, one of Germany’s largest banks with assets totaling $627 billion under management, has announced plans to initiate a cryptocurrency trading pilot program this year. This program is set to include transactions involving Bitcoin.

This move aligns with a broader trend in the banking sector, where traditional institutions are embracing digital assets to cater to evolving customer preferences. Recent developments, such as BlackRock and Fidelity securing approval for spot Bitcoin exchange-traded fund (ETF) applications in the United States, underscore the growing acceptance of cryptocurrencies within the mainstream financial sector.

“According to a study by Genoverband, one in every two banks wants to offer this solution to their customers. Ultimately, each institution makes its decision independently,” said Souad Benkredda, a member of the bank’s board.

Currently, DZ Bank is still waiting for a crypto custody license from the Federal Financial Supervisory Authority (BaFin). The Frankfurt-based bank had initially planned to collaborate with DWP Bank for this venture but later altered its partnership plans. The bank will now proceed with this initiative alongside a new partner, which is yet to be revealed.

The forthcoming pilot program will allow DZ Bank’s customers to engage in cryptocurrency trading and investment without requiring the bank’s advice. By eliminating the necessity for bank advice, reports suggest that DZ Bank will streamline cryptocurrency transactions and also promote self-reliance and empowerment among its customer base.

This approach resonates particularly well with a new generation of investors prioritizing autonomy and control over their financial portfolios compared to conventional banking practices.

Bridging traditional, digital economy

Cryptocurrencies, once on the fringes of financial discussions, have now solidified their position as legitimate assets deserving institutional attention and investment. As the central institution for around 700 cooperative lenders, DZ Bank’s latest initiative signifies a crucial moment in bridging the gap between traditional financial systems and the rapidly expanding digital economy.

DZ Bank’s move into cryptocurrency trading builds on its successful release of a cryptocurrency custody platform in November, utilizing Ripple’s technology solution for secure storage and processing of digital assets. This move comes after the bank had initially partnered with Swiss custody tech firm Metaco, a collaboration that gained additional significance when Metaco was acquired by Ripple.

The crypto custody platform is designed to process and safeguard digital financial instruments for institutional clients. In preparation for operating the platform, the bank has expanded its team, hiring over a dozen employees across the IT, operations and compliance departments.

“We expect that within the next ten years, significant portions of the capital market business will be conducted through infrastructures based on Distributed Ledger Technology (DLT),” said Holger Meffert, head of securities services and digital custody at DZ BANK.

While DZ Bank forges ahead with its cryptocurrency initiatives, some local cooperative banks are already making strides in the digital asset space.

Volksbank Raiffeisenbank Bayern Mitte, for instance, offers Bitcoin investment services and recently announced a consulting and education collaboration with crypto firm Terahash. The collaboration aims to promote the idea that Bitcoin adoption can drive renewable energy initiatives.

“Terahash and VR Bank Bayern Mitte complement each other perfectly,” said Terahash CEO Kristian Klager, according to a translation “The strategic partnership is an important step for us, we can use the synergies and combine our strengths even better.”

Other financial institutions like Deutsche WertpapierServiceBank and DWS are also stepping up efforts to provide investors with access to the digital asset industry and to develop blockchain-related solutions. Traditional banks, including Commerzbank and DekaBank, are also seeking crypto custody licenses from BaFin.