The regulatory environment in Germany and the technological state of blockchain have developed to a point where traditional banks see an opportunity to become a first mover. The German bank von der Heydt now works with BitBond to drive digital innovation.
40 German banks have already expressed their interest with the German financial markets watchdog to get a license for providing crypto trading and custody services. This comes after a legal change effective from 01st of January 2020, which allows German banks to provide such services to their clients.
One of the first banks to make use of this opportunity was Berlin-based solarisBank, which had already been in the digital space for longer. Now was “a good time to get started,” said the Bank’s Managing Director Michael Offermann. “Digital assets will fundamentally change financial markets. As soon as it becomes easier to sell and store Bitcoin and other crypto assets, we expect strong growth.”
solarisBank is no stranger to the digital realm, but other, less tech-savvy banks are discovering the new asset class as well. Munich-based bank Bankhaus von der Heydt, a traditional bank focusing on High Net Worth Individuals, now wants to become a digital pioneer. The bank announced it plans to tokenize bonds and even develop its own stablecoin pegged to the Euro.
von der Heydt and Bitbond: driving digital innovation
Managing Director Philipp Doppelhammer said the bank has taken note of the technological and regulatory developments around blockchain technology and believes the time has come to enter the market and offer blockchain-based financial services.
“We have been observing the evolution of blockchain-based financial services solutions for quite some time now, as we believe it will offer our customers enormous added value. We are optimistic that asset tokenization is now ready for the market from a regulatory and technological point of view,” says Doppelhammer.
On the technical side, the bank works together with the German FinTech Bitbond. The Berlin-based company was the first company to receive approval from the German BaFin for a public Security Token Offering (STO).
“We are working with several banks and financial intermediaries on various projects in the field of tokenization and digital asset custody. We are especially pleased to cooperate with von der Heydt, as this bank is one of the first to use blockchain technology in the area of tokenization and private placements. We believe many banks will follow this lead,” says Bitbond founder and CEO Radoslav Albrecht.
Crypto provides opportunities for small banks; at least temporarily
Blockchain technology offers opportunities in particular for smaller banks, as they can use the current momentum to provide services to their clients that their larger competitors may not yet offer. Moreover, smaller banks can move faster, as decision-making processes are shorter and involve fewer people and hierarchy levels.
That’s also why none of the major banks has yet made a giant step into blockchain, while smaller banks – for example Liechtenstein-based Bank Frick – are already offering a wide range of crypto services.
This opportunity window, however, will close soon. With regulations and the technology maturing, it is only a question of time until the big banks will start getting into crypto as well. And once they role in, they will do so big time.