Commerzbank AG Receives Approval for Crypto Custody Services
Frankfurt-based Commerzbank AG has been given the green light by German regulators to establish a crypto custody business. The move comes as demand for safekeeping of tokenized assets continues to grow. The bank’s expanded license has paved the way for it to offer crypto custody services.
German Banks Respond to Increased Demand
The expansion of licenses by European banking regulators is allowing banks like Commerzbank and DZ Bank AG to venture into digital asset businesses. Other banks, such as Deutsche Bank AG and Société Générale, have also received licenses in response to the growing demand for crypto custody services. Sygnum Bank in Singapore recently acquired a license to cope with increasing demand as well.
The demand for digital asset custody is on the rise due to regulations aimed at safeguarding customer assets on crypto exchanges. Tokenization of real-world assets is also increasing, with companies like Swarm keeping tokenized financial instruments with custodians like Gemini or Coinbase before transferring them to buyers.
Tokenization Industry Maturation and Regulation
William Quigley predicts that businesses specializing in tokenization will emerge in 2024. However, issues such as cross-border asset ownership transfer and regulation need to be addressed. Companies like SteelWave are already allowing fractionalized shares of tokenized properties while being regulated in jurisdictions that have embraced tokenization.
The EU’s Markets in Crypto-Assets (MiCA) bill may provide a framework for the tokenization industry to gain traction despite criticism for not addressing DeFi. This forward-looking approach bodes well for the future of tokenization in the EU.
Hot Take: Implications of Commerzbank’s Entry into Crypto Custody
The entry of Commerzbank into the crypto custody business represents a significant step toward mainstream adoption of digital assets in Germany and Europe. It signals a growing recognition among traditional financial institutions of the importance of catering to the needs of a rapidly evolving market. As more banks receive licenses and regulations continue to evolve, the future looks promising for the digitization and safekeeping of assets.
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