Germany’s Banking Giants Embrace Crypto: Bitpanda to Custody LBBW’s Crypto

Germany’s largest federal bank, Landesbank Baden-Württemberg (LBBW), has announced plans to enter the cryptocurrency market by offering custody services to its institutional clients.

The bank will partner with Austrian cryptocurrency exchange Bitpanda to provide the necessary technical and regulatory infrastructure for the new offering, with a market launch planned for the second half of 2024.

TLDR

• Germany’s largest federal bank, Landesbank Baden-Württemberg (LBBW), plans to offer crypto custody services to institutional clients starting in the second half of 2024.
• LBBW will partner with Austrian cryptocurrency exchange Bitpanda to provide the necessary technical and regulatory infrastructure for the custody services.
• The bank is responding to increasing corporate demand for digital asset custody and aims to support its clients’ individual crypto strategies.
• Other major German banks, such as Deutsche Bank, DZ Bank, and Commerzbank, are also preparing to launch crypto custody and trading services.
• Banks in Germany are preparing for the Markets in Crypto-Assets (MiCA) regulation, which will provide a comprehensive legal framework for the crypto industry by the end of 2024.

The move comes as LBBW experiences increasing demand from its corporate customers for digital asset custody. Jürgen Harengel, managing director of corporate banking at LBBW, stated, “The demand from our corporate customers for digital assets is increasing.” By offering crypto custody services, the bank aims to position itself with a clear added value for its clients while ensuring the highest security standards.

Landesbank Baden-Württemberg, Germany’s biggest federal bank, plans to start offering cryptocurrency custody services in partnership with the Bitpanda exchange. https://t.co/4hQOoVjMwe

— BNN Bloomberg (@BNNBloomberg) April 15, 2024

LBBW will leverage Bitpanda’s institutional custody solution, Bitpanda Custody, which is a crypto custody platform with decentralized finance (DeFi) capabilities. Bitpanda Custody is registered with the United Kingdom’s Financial Conduct Authority (FCA), providing a regulated framework for the custody services.

The partnership between LBBW and Bitpanda will initially focus on offering custody and trading services for Bitcoin, Ethereum, and other digital assets to corporate clients.

The bank believes that cryptocurrencies will establish themselves as a building block for further business models and aims to create the technical and regulatory basis at an early stage to best support its clients’ individual crypto strategies.

LBBW is not the only German bank preparing to enter the cryptocurrency market. Deutsche Bank, Germany’s largest bank, has been working on digital asset custody services since September 2023, partnering with Swiss crypto startup Taurus for custody and tokenization services. DZ Bank, Germany’s second-largest bank, announced plans to launch a crypto trading pilot later in 2024, while Commerzbank secured a crypto custody license from Germany’s financial regulator, BaFin, in late 2022.

The move towards crypto custody and trading services by German banks is driven, in part, by the upcoming Markets in Crypto-Assets (MiCA) regulation, which will take full effect in December 2024. MiCA will provide the first comprehensive legal framework for the crypto industry in the European Union, regulating crypto-assets, crypto-asset services, and crypto-asset service providers (CASPs).

Under MiCA, crypto exchanges will become fully regulated entities by the end of 2024. Vyara Savova, senior policy lead at the European Crypto Initiative, emphasized the significance of the regulation, stating, “2024 is the year of MiCA, and the whole EU will now have a comprehensive legal framework for crypto-assets, crypto-asset services, and crypto-asset service providers (also known as CASPs).”

The final implementation of MiCA will be influenced by the outcome of the second consultation package for reverse solicitation guidelines, which is set to end on April 29.

The consultation will determine how exchanges and other CASPs from countries outside the EU might provide services to EU citizens without a license and how these services should be marketed in Europe.

As German banks prepare for the new regulatory landscape and the increasing demand for digital asset services, their entry into the cryptocurrency market is expected to drive further adoption and legitimization of cryptocurrencies in Europe’s largest economy.

The partnerships between traditional financial institutions and established cryptocurrency platforms, such as Bitpanda, will play a crucial role in bridging the gap between the traditional financial system and the emerging world of digital assets.

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