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One of the German banking giants, Commerzbank, has confirmed reports of its submitted application for a cryptocurrency license. A close source disclosed to media the bank applied for a license in Q1 of this year, and, if approved, would give them legal backing to provide crypto services and grant them custody of digital assets.
Commerzbank provides banking services to over ten million customers and 60k institutional clients. With approval in sight, the bank aims to cater to its numerous clients under its belt. The move makes it the first major German bank to venture into cryptocurrency.
Germany Crypto Licensing
German Financial Supervisory Authority or BaFin is responsible for issuing licenses to crypto ventures dealing in virtual currencies. BaFin once stated in 2020 that businesses wanting to provide virtual currency services must apply to it first.
Based on this publication, about four firms have gotten approval to run crypto services so far. However, BaFin discloses that more than 20 applications are still pending.
The first firm to receive regulatory approval was Coinbase Germany, which happened in June, last year. The most recently approved financial firm to run crypto services is Upvest, which received its license last month.
Germany has been introducing a series of sweeping reforms to accelerate blockchain adoption and protect investors. Last year, the Fund Location Act was passed in July to enable pension and insurers funds to invest up to 20% of their assets in virtual currencies.
Also, the German Finance Ministry published a regulation that saw crypto investors exempted from tax after one year. The German legislature also introduced crypto securities for DLTs.
Commerzbank Amongst the Pioneers of Crypto Integration
Commerzbank has been involved in several blockchain projects since 2018 and performed the earliest DLT transactions with other major financial entities on a Corda-run trading platform. Commerzbank partnered with the R3 consortium to develop an interoperable financial network that simplifies digital trading, which will bring a whole new dimension to banking.
Last August, Commerzbank struck a deal with Deutsche Boerse and 360X to create a digital marketplace for trading NFTs and real estate digital assets. Commerzbank and Deutsche collaborated two years before to pilot tokenized securities transactions using DLT.
Cryptocurrency adoption in Germany has been rising steadily since 2020. According to Kucoin reports, more than 40% of Germans are keen on digital currency investments, while about 37% have been trading virtual currencies for a year plus.
Exchanges are also expanding, with the likes of BitPanda and Coinbase opening new branches in the country. Banks also want to get in the act of offering crypto services to their customers to enable them to trade directly from their accounts.