DZ Bank Launches a Blockchain-Based Digital Custody Platform for Institutional Customers

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DZ Bank is set to launch a new platform for the processing and custody of digital financial instruments based on blockchain technology.

The platform intends to offer custody for crypto securities, such as a crypto bond from Siemens, which was subscribed to by Union Investment and DZ Bank six months ago.

DZ Bank’s next major plan is to apply for a crypto custody license from the Federal Financial Supervisory Authority (BaFin) to enable institutional customers to invest in cryptocurrencies like Bitcoin in the future.

Weighing on crypto securities

DZ Bank, which is Germany’s third-largest bank, has become one of the first credit institutions to launch a blockchain-based platform for the processing and custody of digital financial instruments. The move will enable the bank’s institutional customers to take advantage of the benefits offered by distributed ledger technology (DLT) for capital market processes. The German cooperative’s new platform will initially offer custody for crypto securities, including a crypto bond from Siemens. DZ Bank is also in the process of applying for a crypto custody license from the Federal Financial Supervisory Authority, which would enable it to facilitate crypto investments for institutional and private customers.

Dr. Holger Meffert, Head of Securities Services and Digital Custody at DZ Bank, said that

“We assume that within the next ten years a significant proportion of capital market business will be processed via distributed ledger technology (DLT)-based infrastructures. In the medium term, we see DLT as a complementary technology to the established infrastructures in the existing capital market processes,”

DZ Bank has been embracing blockchain technology for years and is now building a digital custody platform to offer institutional customers self-custody of crypto securities, including a bond from Siemens. As part of its expansion into the crypto space, the bank applied for a crypto custody license from BaFin in June while simultaneously working on a solution for private customers to invest in cryptocurrencies.

Additionally, DZ Bank is participating in the ECB’s exploration phase, testing the settlement of large-volume capital market transactions in central bank money.