Germany's 2nd largest bank DZ to launch crypto custody. Wants a wholesale digital euro
-
Loading... - Erika Zambo
- 13 Oct 2022
- 73 Views
- 0 Like
- 0 Comment
DZ Bank, Germany’s second largest by assets, is working on a digital asset custody solution. The move is driven by client demand, less so for cryptocurrency and more for digital financial instruments, although the solution will handle both. On the securities settlement side, the bank is keen to see the European Central Bank progress toward a wholesale central bank digital currency (CBDC) to enable the settlement of distributed ledger (DLT) transactions.
The bank has been working on the strategy and design of the custody solution for some time and is in the process of appointing a consultant to help to implement the solution and assist with BaFin regulatory approval. At this stage, it is not planning to partner with one of the crypto custody technology firms but intends to develop its own offering.
Talking to Holger Meffert, who heads the bank’s securities management division, he clarified that a key driver is client demand. One of the bank’s biggest clients is Union Investment. While perhaps less well known internationally, Union has assets under management of €427 billion ($427bn), which is only 7% less than the famed American KKR. “For most of the funds that Union Investment has, we are their depository bank, so we should be able to cover their needs,” said Meffert.
Compared to other asset managers, Union Investment considers innovation a high priority. For example, last year, it made a significant investment in the European Investment Bank (EIB) €100m tokenized Ethereum bond issuance, with DZ Bank involved as well. At the time, Union’s Christoph Hock said, “We expect the use of blockchain in combination with tokenization to become a game changer for the industry.”
While DZ Bank is focused on its German clients, asset managers tend to invest internationally, and DZ has to be able to support that. Read More...
