TL; DR Breakdown
- Commerzbank, the largest bank in Germany, has applied for a cryptocurrency license.
- The German government gained support from Commerzbank in support of cryptocurrency.
One of Germany’s largest banks has applied for a license to provide cryptocurrency custody services.
According to the bank’s representative, Commerzbank “applied for the crypto custody license in the first quarter of 2022.” Upon approval, the bank can offer exchange services as well as digital assets custody.
Commerzbank representative confirmed to regional media outlet Börsen-Zeitung that the bank “applied for the crypto custody license in the first quarter of 2022.” It would be licensed to offer exchange services as well as safekeeping and protection of crypto-funds if it is approved.
The announcement comes as the first time a major bank has made such a move in the country, and it is another indication that crypto assets are becoming increasingly popular. Many people think that the influx of institutional investors contributing to the current bull run in prices is one of the reasons behind this rise.
Commerzbank seconds the government in crypto adoption
Commerzbank’s decision also comes amid concerted efforts by the German government to create a more nurturing environment for the crypto sector. Germany has required that any business wanting to provide cryptocurrency services obtain approval from the Federal Financial Supervisory Authority, known as BaFin, since this year.
Over 18 million consumers and over 70,000 institutional clients use Commerzbank each month, and the cryptocurrency service will be directed at its institutional customer base.
Currently, only four firms have permission from the German regulator to operate cryptocurrency custody organizations, but this could change next year. According to BaFin, more than 25 businesses seek permission to establish such businesses.
Commerzbank is one of a number of banks that have recently submitted an application for a cryptocurrency custody license. In 2009, when Bitcoin was first introduced, financial institutions were terrified and suspicious about its value and effectiveness. Financial companies like global banks have continuously warned early bitcoin investors about the volatility and risks associated with cryptocurrencies.
Banks in crypto
As digital assets become more mainstream, banks and other financial firms have started to develop an interest in providing digital asset services. For instance, JPMorgan had announced plans to offer crypto services to wealthy clients. Recently, it showed interest in joining the metaverse.
It seems that traditional financial institutions are slowly but surely wading into the cryptocurrency space as it becomes more established. With Commerzbank being one of Germany’s largest banks, this news is likely to have a significant impact on the country’s relationship with cryptocurrency.
In June 2021, Coinbase in Germany was the first to obtain authorization as a crypto custodian, after which Upvest of Berlin was licensed in March.
