Germany’s DekaBank has secured a big one, bagging a license to offer crypto custodial services from the European Central Bank (ECB) and the country’s regulator, BaFin. The license was approved under the Banking Act (KWG), and it puts DekaBank in a category with Commerzbank as the only financial institution operating in the space.
However, one cannot get too excited considering the fact that Germany is one of the countries where rules and regulations are their bread and butter. BaFin has granted a total of 11 crypto custodial licenses, with most going to native crypto companies like the crypto division of Hauck Aufhäuser Lampe Privatbank.
DekaBank secures a strong custodial approval
The custodial license granted to DekaBank falls under the same traditional regulations as Commerzbank, giving them a legitimacy that most smaller crypto firms do not have. This is also not its first rodeo with a regulatory license this year, earning a crypto securities registrar license in July. This means it can issue digital securities based on a blockchain without a central securities depository.
The license removes the middlemen, a known trait of the crypto industry. DekaBank is also one of the founding members of the blockchain platform designed to issue digital securities known as SWIAT. The financial institution onboarded giants like Standard Chartered and LBBW, opening SWIAT up for Siemens to issue a €300 million digital bond in September.
Germany’s regulatory framework at a glance
Germany has been discussing the replacement of its old crypto rules with the new MiCA framework, a move that is yet to happen because of the political turmoil in the country. The rule passed on December 18, enabling licensed firms like DekaBank to provide their services across the European Union. Before the rules were put in place, the lack of regulatory clarity was worrying for banks.
However, the country’s slow regulatory movement also comes with its advantages, with the country recognizing digital assets as financial instruments in 2013. In 2020, it made the work of BaFin easier when it asked crypto exchanges to undergo a mandatory test for a license. While most countries are battling with clarity, Germany is at the forefront. Although slow, it helps and everybody is happy.
However, the crypto population is still concerned about security, with about 82% respondents of in a recent survey noting that it is the first feature that they look out for. It is the same for the wider crypto population globally, especially with the increasing cases of hacks and platform breaches over the last few months. In addition, the country’s crypto population tilt towards Bitcoin, and Ethereum, with Solana gaining ground.
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