Deutsche Bank opens crypto custody to institutional clients

Deutsche Bank said on Nov. 11 that its digital asset custody service had gone live for paying clients, alongside a deal with Deutsche Asset Management to explore tokenized funds and other products. The bank did not disclose a value for the agreement. The Block reported that the service lets customers hold selected digital assets at the bank, which manages their wallets and private keys.

The launch shifts Deutsche Bank’s plan, announced in September, into client operations. The bank says it has received approval from Germany’s financial regulator, BaFin, and is offering the service to corporate and institutional clients in Europe. It is not described as a retail product.

Which assets can clients hold, and how does custody work?

At launch, the service supports Bitcoin and Ether, plus selected stablecoins or e-money tokens: USDC, EURC and EURAU, according to Deutsche Bank’s launch notice. A stablecoin is a digital token designed to track the value of a currency. The bank says tokenized financial instruments may be added later, subject to client demand and its approval and risk processes.

Clients can ask Deutsche Bank to safeguard assets and transfer them to third parties. The bank holds the private keys—the codes that control access to digital assets—so clients do not have to build their own custody systems. Its stated safeguards include hardware protection for keys, separate storage environments, including offline “cold” storage, and multiple-person approval for important actions.

The service is initially for eligible clients of the bank’s Corporate Bank and Investment Bank, including companies, asset managers, hedge funds, custodians, brokers and sovereign institutions. Onboarding remains subject to the bank’s criteria and due diligence. The launch materials and reporting do not give a fee schedule, so clients will need to ask the bank about pricing and access requirements.

What does the Deutsche Asset Management agreement cover?

The firms signed a memorandum of understanding to explore work on tokenized money market funds, crypto-asset exchange-traded commodities, and stablecoins. The areas under discussion include custody and settlement, liquidity management, treasury and distribution through Deutsche Bank’s platform, The Block reported. A memorandum of understanding sets out areas to explore; it does not establish that those products are already available.

Deutsche Asset Management chief product officer Manfred Bauer told The Block that the firm planned to launch a tokenized money market fund. The report put its assets under management at €1.22 trillion as of Sept. 30. The firms have not announced a launch date, fund terms or how the proposed products would be distributed.

What should clients watch next?

The next signals are whether Deutsche Asset Management brings a tokenized money market fund to market, and whether the partners publish concrete plans for the other product areas. Deutsche Bank has said the supported assets may expand over time, but additions depend on its approvals, risk controls, regulation and client demand. For now, institutions considering the service need to confirm eligibility, fees and the exact terms directly with the bank.

Source material

• The Block reported — theblock.co
• Deutsche Bank’s launch notice — corporates.db.com