German Bank Commerzbank spearheads local crypto license application for banking institutions

  • Commerzbank has become the first bank in Germany to apply for a crypto services license with the financial regulator BaFin.
  • As of Jan. 2022, all businesses wishing to provide crypto services must first gain approval from BaFin.

For the first time in the history of Germany, a local bank, Commerzbank,  has applied for a license for crypto services. A spokesperson from Commerzbank confirmed the news on April 14, via the local media outlet Börsen-Zeitung. The representative said the bank “applied for the crypto custody license in the first quarter of 2022.” The institution now awaits feedback from the country’s financial regulator – the Federal Financial Supervisory Authority (BaFin).

Of note, Commerzbank is one of the largest banking institutions in the country. The bank boasts over 18 million customers and over 70,000 institutional clients. Should its license application find approval, the bank would be authorized to provide a set of crypto-related services. On the list are crypto exchange, custody, and asset protection. Reportedly, these services will mainly target its institutional client base.

German Bank Commerzbank pushing for crypto adoption

As a rule, starting this year, any businesses in Germany wishing to offer crypto services had to acquire BaFin approval. Presently, the watchdog has only granted four companies a license to operate. Coinbase’s Germany branch was the first to get approval in June 2021. The most recent is the Berlin-based fintech firm Upvest, which acquired a license in March.

Meanwhile, 25 other businesses have their applications pending, with Commerzbank being the latest to join the queue.

The move by Commerzbank is not a huge surprise since it has expressed huge interest in blockchain projects since 2018. The bank, alongside two others, conducted the first transactions on a security lending platform’s distributed ledger technology (DLT) in 2019.

A more recent partnership was in August 2021. Commerzbank and Deutsche Boerse jointly invested in a company developing blockchain-based digital marketplaces for assets such as art and real estate.

Crypto adoption in Germany

All through 2021, Germany developed a set of regulations on blockchain and cryptocurrencies. The rules, though strict, concentrated on allowing adoption while protecting consumers and preventing criminal acts. 

For instance, laws under the “Spezialfonds” category allow institutional players to invest up to 20 percent of holdings in crypto. Union Investment, a 500-billion asset management giant in the country, was reportedly seeking Bitcoin exposure to several of its funds.

Another law is the new German Money Laundering Act. went into effect at the beginning of the year. The Act allows financial institutions to offer their customers cryptocurrencies alongside traditional investment products, such as stocks and bonds.

Already, Germany is showing signs of increased crypto adoption, other than the BaFin-approved crypto licenses. According to a March report by Kucoin, 44 percent of Germans are “motivated to invest in cryptocurrencies.” Additionally, of those holding cryptocurrencies, 37 percent of them began digital asset trading a year ago.

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