If you’ve been on Crypto Twitter at all, you likely know that German financial institution Deutsche Bank has long been an enemy of the diehard strain of Bitcoin enthusiasts for years now.
Not only does Deutsche Bank deal in fiat, but in early 2018, the firm wrote in an extensive research report that “Bitcoin is actually worthless; it is just a sequence of digital zeros and ones. It has no intrinsic value. For this reason, it does not really make sense to call Bitcoin “digital gold” or treat it as a commodity.”
But in an odd turn of events, it seems that the bank has changed its tune. A report from Chinese media has revealed that the institution is the sponsor behind the latest IPO effort from Bitmain, the Chinese cryptocurrency mining giant.
Bitmain Shakes Hands With Deutsche Bank Over IPO Plans
According to a report from Tencent News published on October 30th, which cited sources familiar with the matter, Deutsche Bank is sponsoring Bitmain’s intent to go public on U.S. markets. Bitmain purportedly filed its latest IPO application with the Securities and Exchange Commission (SEC).
Previously, Bitmain was planning on raising billions of dollars through a listing on the Hong Kong Stock Exchange; now, the firm is a lot less ambitious, with a Bloomberg report revealing earlier this year that the firm’s next planned IPO would target a raise of $300 million to $500 million.
This move comes as Bitmain has erupted in chaos over an internal power struggle between co-founders Jihan Wu and Micree Zhan. Jihan Wu, who is the face of the company, has dismissed Zhan, who is now purportedly banned from Bitmain’s buildings despite him being a massive shareholder.
Deutsche Bank Thinks Bitcoin is Becoming Attractive
This may be just a ploy from the currently-struggling Deutsche Bank to secure some clients and make some money, yet the institution — or at least an executive — recently expressed interest in Bitcoin as an investment.
Speaking with CNBC amid the Bitcoin craze seen in late-June, Jim Reid, Head of Global Fundamental Credit Strategy at Deutsche Bank, said that he thinks the cryptocurrency may be becoming attractive.
He specifically stated that if central banks are aggressive with their monetary policy, then alternative currencies and investments, like Bitcoin and gold, become somewhat tantalizing. (What’s somewhat ironic about this is that central bank’s aggressive policies have partially attributed to a downturn in Deutsche Bank’s business.)
At the time, Reid was referring to a statement from the Chairman of the Federal Reserve, Jerome Powell, in which the monetary leader said that the American central bank was thinking of cutting interest rates due to economic risks and inflation concerns.
What’s interesting is that since Reid’s comment and Powell’s speech, central banks the world over have continued to push the envelope when it comes to central banking strategies. By the Deutsche Bank executive’s logic, this trend should make Bitcoin that much more fundamentally strong.
Indeed, on Wednesday, Powell revealed that the Fed’s Federal Open Market Committee — the body responsible for altering the interest rate to improve the economy — has lowered its benchmark funds rate by 0.25% (25 basis points) 5o a range of 1.5% to 1.75%. This is the Federal Reserve’s third cut this year.
While 1.5% to 1.75% is already low by historical standards, it gets worse if you look abroad. As reported by Blockonomi previously, countless central banks in the European region have forced negative interest rates on banks — meaning that institutions lose money with time, not gain it. While not all banks pass down these negative rates to consumers, there are cases of banks charging customers for storing money.
Many say that this proves the underlying value of no-yield assets, like gold or Bitcoin, as they can be held without losing their value over time (market conditions vary).