With the expansion in the crypto market throughout the diverse regions of the globe and several industries, banking organizations are experiencing a growing demand from consumers to provide crypto-related facilities and investments in a regulated and secure manner. Commerzbank – a German-based bank – has taken its initial step to launch services related to digital assets and declared its application for the BaFin (the Federal Financial Supervisory Authority) license within the country to run a business for crypto custody.
In particular, a representative from Commerzbank stated that the institution applied for a license for crypto custody in this year’s earliest quarter, as reported on the 14th of April. The BaF license is granted on the behalf of the authorities to the financial bodies that intend to keep crypto-assets for consumers and their trading. Since 1st January 2020, there has been a requirement for this license to initiate crypto-business activities including the assets ETH (Ether) and BTC (Bitcoin).
The necessity for the BaFin license
Determining to execute regulated services of finance without an adequate license involves the hazard of a criminal punishment like the imprisonment of nearly five years for responsible people. Nonetheless, the law additionally proposes kind transformational provisions for institutions that had in advance been organizing related transfers before the implementation of the directive
Commerzbank, providing services to approximately 28,000 corporate consumer groups and almost 11M entrepreneurial and individual customers across Germany, wants to offer the scheduled services for crypto custody for the organizational consumers. By filing for turning into a custodian for crypto, the platform has entered a large series of institutions endeavoring to secure it.
As per the financial regulator, up to 25 applications have already been obtained by it for the license up till now, and has in advance provided approval for four. In 2021’s January, Coinbase turned into the initial firm to have a license for crypto custody in Germany. At present, Commerzbank counts to be the earliest bank to have filed for it.
Banks broaden their scope with an increase in demand
Banks throughout the globe are presenting a keen interest in widening their services to incorporate crypto. As reported earlier, Goldman Sachs is among the prominent banking institutions and has a strategy to provide rich consumers with crypto services in the next year’s second quarter. Moreover, it has been argued by Blythe Masters (a fintech expert and board member of Credit Suisse) that BTC does not pose a hazard to the banking sector or fiat money.
James Thompson