Deutsche Bank Leaps into Cryptocurrency with Taurus Custody Partnership

Deutsche Bank has teamed up with Taurus - a Swiss startup specializing in the secure storage of cryptocurrencies - to establish services related to digital asset custody and tokenization, as announced by the companies in Geneva.

Deutsche Bank's Crypto Custody Evolution

In June, Germany's largest financial institution, Deutsche Bank, communicated its application for a cryptocurrency custody license from the nation's fiscal regulatory body, BaFin. The bank's interest in cryptocurrency custody dates back to early 2021, with information about a prototype for digital asset custody being featured in a report by the World Economic Forum.

The implementation of regulations by Germany for companies involved in cryptocurrency asset custody and the broader proposed European framework for the regulation of Markets in Crypto-Assets (MiCA) provide traditional financial institutions with the clarity needed to explore the digital assets sector.

Deutsche Bank has emphasized that traditional financial institutions must adjust to the expanding opportunities within the digital asset market due to its substantial growth potential.

In February, Deutsche Bank made a strategic investment in Taurus during a Series B funding round that was amassed at $65 million. This funding round, spearheaded by Credit Suisse and boasting participation from Arab Bank Switzerland and Pictet Group, signaled a significant move into the cryptocurrency arena. Lamine Brahimi, one of Taurus' co-founders, highlighted that Deutsche Bank initiated a meticulous due diligence process for potential cryptocurrency custody partners in late 2021, which was successfully concluded in 2022.

Charting the Path to Cryptocurrency Custody and Tokenization

Established in 2018, Taurus offers high-quality infrastructure to more than 25 institutional clients, enabling them to issue, securely hold, and trade digital assets. Additionally, Taurus operates a platform dedicated to private assets and tokenized securities.

Brahimi mentioned in an interview with CoinDesk, "We won the deal a couple of quarters ago, making the bank our client, and then decided to acquire a stake in Taurus. The partnership primarily focuses on cryptocurrencies, although our reputation extends beyond just cryptocurrencies. Therefore, the bank will have the capability to tokenize assets and provide asset servicing where it deems appropriate."

In June, Taurus expanded its tokenization and custody services by incorporating the Polygon network, thereby becoming the fourth blockchain supported for its clients, following Ethereum, Tezos, and Cardano.

Taurus co-founders Sébastien Dessimoz, Jean-Philippe Aumasson, Lamine Brahimi, and Oren-Olivier Puder

During a period when interest in cryptocurrency-related products appears to be subdued in the market, this announcement reveals that institutions are quietly committed to the asset class.

Paul Maley, the global head of securities services at Deutsche Bank, outlined the plan to develop digital asset custody services covering a wide range of digital asset types for corporate and institutional clients. He stated, "Initially, we will offer custody for selected cryptocurrencies and certain stablecoins. We anticipate the initial surge of activity will center around these chosen cryptocurrencies and stablecoins. Nevertheless, we recognize the potential in the broader adoption of tokenized financial assets."

The bank's decision is in line with its overarching strategy to boost fee revenue, reflecting comparable initiatives focused on digital assets within its investment division, DWS Group, as articulated by David Lynne, who heads Deutsche Bank's commercial banking unit.

While Deutsche Bank remains committed to navigating the dynamic crypto and digital asset landscape, it recognizes that regulatory transparency in Europe and Asia will play a pivotal role in shaping its expansion strategies. This collaboration highlights the growing curiosity within the financial sector to leverage blockchain technology and digital assets, catering to the evolving requirements of institutional clients and the wider financial landscape.

Regarding international regulatory variations, Maley commented, "It's safe to say that regulatory developments outside of the United States, particularly in Europe and Asia, have offered participants in the market greater clarity within those jurisdictions."