Earlier this year, the fifth iteration of the European Money Laundering Directive (AMLD5) was rolled out, changing a number of facets related to finance and commerce across the European Union. One thing that was affected was how financial companies are meant to deal with crypto assets.
In Germany, in particular, legislators began to allow financial institutions to offer services related to Bitcoin and cryptocurrency to their clients, expanding from their traditional repertoire of only stocks and bonds.
While it seems that no German bank has announced the launch of Bitcoin services yet, reports indicate there are backroom efforts amongst dozens of banks to make mainstream crypto banking a reality, potentially boding well for adoption and the legitimacy of this embattled space.
German Regulators See Much Interest in Crypto From Banks
According to a recent report from German media outlet Handelsblatt, the Federal Financial Supervisory Authority of Germany, also known as BaFin, has seen much crypto interest from banks under its jurisdiction.
Government officials purportedly said “more than 40” expressions of interest have been received from banks “for permission to operate the crypto custody business in the future.” The banks were not named in the report.
Frank Schäffler, member of the Bundestag, said the following on this trend:
The market is growing faster than the Federal Ministry of Finance has predicted. That is both a blessing and a curse. The high demand for crypto custody licenses shows that companies are increasingly adopting blockchain technology, but is also the result of the new legislation.
Banks offering crypto custody in Germany would add to the country’s budding crypto ecosystem as is.
Case in point, Germany’s second-largest stock exchange, Boerse Stuttgart, late last year opened up its cryptocurrency trading platform to the public:
At Germany’s first regulated trading venue for digital assets, users can currently trade bitcoin against the euro. Additional digital assets are to be added.
Other Banks Want to Get Involved
It isn’t only German banks that want in on the crypto craze.
As reported by Blockonomi previously, five American senators in January introduced Senate bill 2594, which has passed first reading. The bill will make it legal for Hawaiian banks to store digital assets, which is a class that includes “virtual currencies,” “digital securities,” and “open blockchain tokens.”
The wording in this bill strongly implies Bitcoin, Ethereum, and other open/decentralized coins will be able to be stored by banks should the bill pass, which could mark a strong step forward in the Bitcoin security game for average Joes and Jills.
Also, a Reuters report in December citing people familiar with the matter revealed that large Dutch bank ING is working on a crypto custody project.
Incumbents to Oust
While there is much institutional interest in offering crypto services as can be seen above, there are already swaths of respected firms already offering institutional and high-net-worth retail investors Bitcoin storage.
Companies that offer crypto custodial services include Fidelity Investments — one of Wall Street’s biggest financial services firms — the Microsoft-backed Bakkt, and crypto incumbents like Coinbase and Gemini.
While most of these companies do not share data about their clients, even in aggregate, Coinbase’s chief executive, Brian Armstrong, has revealed that his firm’s custody product has been receiving much interest from clients.
In fact, the company has said that it has over $7 billion worth of crypto assets under custody, representing a large portion of the entire Bitcoin in existence.