With the cryptocurrency market gaining significant acceptance globally, financial institutions and banks face considerable pressure and a spike in demand from clients to offer crypto-related services in a secure and regulated manner.
Commerzbank’s BaFin Application
With the increasing demand for crypto services, German bank Commerzbank has taken its first steps toward offering crypto and digital-asset-related services. The bank has announced that it has applied for the country’s Federal Financial Supervisory Authority (BaFin) license for a crypto custody business. According to the bank’s representatives, the bank had applied for the license in the first quarter of 2022.
Commerzbank offers services to over 28,000 corporate client groups and nearly 11 million private and entrepreneurial clients in Germany. The bank will be offering its planned custody service to its institutional clients. A representative stated that the bank is looking to help shape the emerging digital ecosystem around the trading and custody of non-physical assets. The bank is also collaborating with Deutsche Borse and Fintech 360X while also pursuing its digital asset strategy and planning its offerings to its clientele.
Why Financial Institutions Require the BaFin License
The BaFin license is given to financial institutions looking to store and trade digital currencies for their clientele. The license has been made mandatory for conducting business with cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH). If an institution operates regulated financial without the necessary BaFin license, the individuals responsible are liable for a criminal penalty. However, the law had also put in place provisions to allow a smooth transition for organizations already operating and conducting crypto-related transactions before the directive came into effect.
Commerzbank’s move to obtain a BaFin license and become a crypto custodian puts it in the company of a long list of institutions trying to obtain the license. Germany’s financial regulator has stated that it has already received 25 applications for the BaFin license and has already approved four. Coinbase became the first organization to earn a crypto custody license in Germany.
Global Banks Look To Expand Into Crypto
Banks worldwide have begun showing an increasing interest in crypto and are fast expanding their services to cover digital assets and cryptocurrencies. One of the institutions looking to expand into the crypto space is Goldman Sachs, which is planning to launch crypto-related services for its high net worth clients sometime in 2022. Credit Suisse also seems to be warming up to the idea of crypto, with board member and fintech expert Blythe Masters stating that Bitcoin posed no threat to fiat money. However, there are also views that cryptocurrencies will render banking services obsolete.
Other Banks Granted Crypto Licenses
Several other banks have also been granted the license to launch their own cryptocurrency. These include Russia’s largest bank Sberbank, which was awarded the license to launch its own cryptocurrency by Russia’s central bank despite heavy sanctions on Russia. Some have theorised that the cryptocurrency, called sbercoin, is a convenient way to get past sanctions. Israel’s largest bank, Bank Leumi, has also announced that it would be the first bank in Israel to enable cryptocurrency trading after announcing a partnership with blockchain company Paxos. Meanwhile, in Australia, the Commonwealth Bank of Australia also announced plans to expand its current offerings of crypto services.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Credit: Source link