As the traditional banking system faces an existential crisis, banks in Germany are preparing to hedge on Bitcoin.
The Deutsche WertpapierService Bank or dwpbank, a securities processing company that offers investment services to over 1,200 savings, cooperative, private, and commercial banks in the country, has announced the launch of wpNEX, a crypto trading platform for banks.
Dwpbank to Offer Bitcoin Trading Services to More Than 1,200 Affiliated Banks
With wpNEX, dwpbank will allow all affiliated banks to offer crypto trading services to retail customers by the end of this year, starting with the world’s most valuable cryptocurrency – Bitcoin. MLP Banking AG became the first dwpbank affiliate to sign up for the program and has already conducted its first transaction in BTC.
Commenting on the partnership, Dr Paul Utzat, the Head of Accounting and Securities Settlement at MLP Banking, said the addition of crypto trading services is a logical step in expanding the bank’s existing asset management offering.
wpNEX will feature a crypto trading option alongside dwpbank customers’ online banking services. The crypto account will be integrated into customers’ securities accounts, allowing them to buy, store, and trade cryptocurrencies in one place. Current account holders can offset their crypto accounts with no pre-funding necessary, similar to how securities trading is handled by the bank. Existing clients won’t have to go through additional know-your-customer (KYC) procedures to start a crypto account.
Crypto trading accounts will be linked to euro cash accounts, allowing users to transact directly on wpNEX without needing to interact with third-party payment services.
Digital asset custodian and wallet-as-a-service provider Tangany will ensure the platform’s security and hold customers’ private keys, while digital asset trading firm Tradias will be responsible for executing exchange orders and pricing the crypto assets.
Heiko Beck, CEO of dwpbank, confirmed that the bank will be adding more products, including cryptocurrencies, digital assets, and tokenized securities, to wpNEX as the service expands.
Germany a Global Leader When it Comes to Crypto and Blockchain Adoption
Germany is a global leader when it comes to crypto adoption and the country was recently named the world’s most crypto-friendly state. In 2019, Germany became the first country to adopt a blockchain strategy to help develop the technology and transform itself into a Web 3.0 hub.
Last month, DZ Bank, the second-largest bank in Germany by asset size and the central service provider for Deutschland’s 800 cooperative banks and their network of 8,500 branches, announced a partnership with Swiss digital asset firm Metaco to integrate cryptocurrencies into its asset management services.
Metaco is also working with one of Germany’s oldest banks, DekaBank, to launch a blockchain-based tokenization platform. The service, expected to launch sometime next year, will allow the bank’s institutional clients to tokenize and trade assets such as bonds, stocks, and funds on the Ethereum (ETH) and Polygon (MATIC) blockchains. DekaBank emphasized that it will not be providing cryptocurrency trading services as the bank is solely focused on regulated products that carry “less risk.”
DWS, the asset management arm of Deutsche Bank, is reportedly in conversation to purchase a minority stake in two German crypto companies – crypto exchange-traded products provider Deutsche Digital Assets and traditional finance market maker Tradias.
In February, engineering and technology giant Siemens became the first to issue a blockchain-based tokenized bond in Germany. The company’s $60 million digital bond issued on the Polygon (MATIC) blockchain was purchased by DekaBank, DZ Bank, and Union Investment.
Siemens said issuing a bond on a decentralized and public ledger eliminates the need to maintain paper-based bond certificates and also allows the company to sell the instruments directly to investors without requiring any financial institution to act as an intermediary.
In recent months, German financial authority BaFin issued operational licenses to multiple cryptocurrency exchanges, including Coinbase and Austrian retail crypto trading platform Bitpanda. The regulator also issued its licenses to Kapilendo, Tangany, and Upvest, which offers crypto trading and custodial services to institutional clients.
Germany is said to have one of the friendliest tax regimes for crypto holders, as the country charges zero capital gains tax on the sale of crypto assets held for over a year. The country is among the top 10 for crypto miners and is second only to the United States in the number of Bitcoin and Ethereum nodes. Northern Data, the largest Bitcoin mining company in the European Union (EU), is based in Germany and operates its largest facility in Frankfurt which is powered entirely by renewable energy.
The country was ahead of Europe when it came to enacting crypto regulations. Germany’s Federal Financial Supervisory Authority (BaFin) requires crypto custodian service providers, who manage private keys to clients’ crypto wallets on their behalf, to obtain a license from the agency before operating. Germany is considering the EU’s Markets in Crypto Assets (MiCA) regulation, which is expected to become law in 2024.
At the time of writing, BTC is trading at $27,686 – down over 2% in the last 24 hours. Bitcoin which had been making gains in the wake of bank failures in the U.S. and Europe, lost momentum after the U.S. Federal Reserve increased its borrowing interest rates on the dollar by 25 basis points on Tuesday.