Germany’s DekaBank has received a bank crypto custody license from German regulator BaFin and the European Central Bank (ECB). We believe Commerzbank was the first German bank licensed last year. However, other major banks have not received licenses, including DZ Bank.
BaFin has issued another 11 crypto custody licenses, mainly for crypto firms. One of them is the digital asset custody subsidiary of Hauck Aufhäuser Lampe Privatbank.
The difference with DekaBank and Commerzbank versus the crypto firms is they are licensed under the Banking Act (KWG).
This is DekaBank’s second new license this year. In July it received a license as a crypto securities registrar for the German issuance of DLT-based digital securities. These crypto securities don’t require a central securities depository (CSD) for issuance.
DekaBank is very active in the digital asset space. It is the founder of SWIAT, the blockchain platform for digital securities in which Standard Chartered and LBBW are also investors. In September Siemens used the platform to issue a €300 million digital bond.
Our understanding is that a crypto custody license is not needed for crypto securities, but is required for cryptocurrencies.
As part of the announcement, DekaBank said this allows the bank to operate throughout Europe under the EU’s MiCAR crypto legislation.
A MiCAR holdup?
We’ve previously reported that there’s a bit of a challenge with MiCAR for German institutions. In October 2023 a draft version of the Supervision of Crypto Markets Act (KMAG) was introduced. It’s the piece of legislation that supplants Germany’s old crypto rules with MiCAR. The problem is this legislation has not been passed and with the collapse of the German ruling coalition, it’s not likely soon.
Hence, while in theory DekaBank’s license will allow it to operate in the EU, we believe that may be subject to the passage of the KMAG law. We contacted DekaBank to confirm, but didn’t receive a response in time for publication.
