Deutsche Bank Joins Wall Street Takeover of Crypto

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Deutsche Bank has applied for a digital asset custody license with BaFin as traditional finance (TradFi) firms use asset tokenization to stage a silent takeover of the crypto industry.

The company wants to diversify revenue streams while other crypto firms wait for Europe’s Markets in Crypto-Assets (MiCA) bill to become effective.

Wall Street Companies Explore Asset Tokenization as Entry Point

The company revealed tentative plans to launch the custody business in 2020. 

Deutsche Bank is approaching digital assets from the investment potential perspective. Its Singapore division recently trialed a tokenized investment platform with Memento Blockchain. 

TradFi firms are potentially banking on investment managers’ trust in their brands as they build crypto trading platforms. They have explored tokenization to expose clients to digital assets indirectly.

Tokenization allows banks to manage illiquid, often tangible, assets on the blockchain without a broker.

Citibank predicted that the total addressable market for tokenization would grow 80 times by 2030.

Citigroup’s Asset Tokenization Predictions | Source: Citigroup

JPMorgan exchanged ERC-20 tokenized US dollars and Japanese yen through a permissioned Aave pool last year. 

BlackRock Application Will Reveal if SEC Will Play Favorites

Grayscale argued that the company’s exchange-traded fund (ETF) would use the same reference rate as futures ETFs the Securities and Exchange Commission (SEC) has already approved.

As a result, either the SEC could approve Grayscale’s application or rescind approvals for existing products. Litigation in the case is ongoing.

Asset management giant BlackRock recently requested permission to run a spot Bitcoin ETF. It would designate Coinbase as the preferred digital asset custodian and benchmark Bitcoin’s price using the CME CF rate.

Reputable crypto exchanges in the US determine the CME’s rate.

Wall Street Giant BlackRock's Assets Under Management
BlackRock’s Assets Under Management in 2022 | Source: Statista

The SEC previously approved 575 of BlackRock’s ETF applications but has so far denied a spot Bitcoin fund. It argued the underlying market was open to manipulation. 

However, BlackRock CEO Larry Fink’s powerful political connections fueled speculation that BlackRock’s application could be different.

The chief executive is believed to have influenced the SEC’s Environmental and Sustainability Goals and other elements of corporate finance markets in the US. 

Speculation is growing the SEC has also delayed issuing new crypto rules to allow a Wall Street takeover of crypto.

Notable broker Charles Schwab and market makers Citadel Securities and Virtu Financial back EDX markets, while UK bank Standard Chartered supports the exchange Zodia Markets and custodian Zodia Custody.

Read here how the crypto industry has turned against SEC Chief Gary Gensler.

House Financial Services Committee Chair Patrick McHenry tweeted after the BlackRock application,

“Your move, Gary Gensler. The SEC must not pick winners and losers based on inconsistent factors. I’ll be watching this closely.”

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.


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