Deutsche Bank Activates Bitcoin Custody for Institutional Clients

Deutsche Bank has activated its digital asset custody service for paying customers, the German lender announced on Wednesday. The service enables institutional investors and corporations across Europe to hold bitcoin with Germany's largest bank, coming less than two months after the initial announcement.

The bank first revealed the service on Sept. 16, stating it would launch with initial clients during the year once regulatory approval was secured. The platform now supports bitcoin, ether, and the stablecoins USDC, EURC, and EURAU, as detailed on its product page.

Under the arrangement, Deutsche Bank handles wallet management and private keys for clients, who can store and transfer assets to third parties. The bank positioned this as a way for clients to avoid developing and maintaining their own custody systems.

“In the medium term we aim to deliver a fully integrated, regulated ecosystem that supports the custody, tokenisation, and settlement of digital assets,” said Paul Maley, global head of trust and securities services at Deutsche Bank.

The lender did not disclose its first clients, the number of sign-ups, or the fees for holding coins. The service targets institutional and corporate clients, not retail customers.

What Deutsche Bank is offering

The product page outlines private keys stored in hardware security modules, a choice of warm and cold storage, multi-factor authentication, segregation of client assets, and a customizable approval process for transfers. Clients access the service through Autobahn, Deutsche Bank's multi-channel gateway, or its Corporate Bank portal.

The service is booked out of Deutsche Bank AG in Frankfurt and is available in Germany, with cross-border servicing across Europe via passporting. Target clients include institutional investors, multinationals and corporates, governments and sovereigns, and wealth managers. The offering is described as compliant with the European Union's MiCA crypto rules.

For now, the initial services are limited to custody, transfers, and internal moves between warm and cold storage, with “further capabilities planned.” The September announcement noted that the asset list may expand based on client demand and that tokenized financial instruments are on the roadmap.

It also included a warning common in the crypto space: assets held this way are not covered by a deposit-guarantee scheme protecting eligible bank deposits.

A tie-up with Deutsche Asset Management

Alongside the launch, Deutsche Bank signed a memorandum of understanding with Deutsche Asset Management, the money manager it mostly owns, formerly known as DWS. The agreement aims “to explore comprehensive commercial and technical collaboration opportunities in the digital asset space,” the bank stated.

The firms plan to examine tokenized money market funds, crypto exchange-traded commodities, and stablecoins based on the new custody platform. Manfred Bauer, chief product officer at Deutsche Asset Management, said it intends to launch a tokenized money market fund, according to a report. The asset manager oversaw about €1.22 trillion as of Sept. 30.

Deutsche Asset Management already backs AllUnity, the joint venture that issues EURAU, one of the three stablecoins supported by the bank's custody service.

Deutsche Bank also told Reuters it aims to extend the service to Asia. In October, the bank's corporate banking chief said the lender planned to expand the platform into that region next year.

The launch places Deutsche Bank among a growing number of large banks now holding bitcoin for clients. BNY Mellon became the first major U.S. bank to offer digital asset custody in 2022. This year, Standard Chartered moved to offer custody in Singapore, while South Africa's Absa became the first bank on the continent to custody bitcoin.

In the U.S., Coinbase this week secured a full federal trust charter from the OCC, another sign that custody is becoming a regulated banking business on both sides of the Atlantic.

The timing is unfavorable for new money. Bitcoin traded near $73,900 Wednesday morning, close to its lowest level since August after a hotter-than-expected U.S. inflation report on Tuesday.