Germany’s Federal Bank LBBW to Offer Crypto Custodial Services

• This move reflects the increasing demand for digital assets among corporate customers, with LBBW aiming to support their individual crypto strategies.
• The cryptocurrency landscape in Germany is evolving rapidly, with banks and asset managers gearing up for forthcoming EU regulations such as the MiCA framework.

In the latest development, Germany’s largest federal bank, Landesbank Baden-Württemberg (LBBW), has announced its intention to launch cryptocurrency custody services in collaboration with Bitpanda exchange.

LBBW and Bitpanda disclosed their plan to provide crypto custody solutions to institutional and corporate clients, commencing in the latter half of 2024, according to a joint statement released on Monday. Speaking on the development, Jürgen Harengel, managing director of corporate banking at LBBW, told Bloomberg:

“The demand from our corporate customers for digital assets is increasing. We are convinced that crypto assets will establish themselves as a building block for further business models. With this cooperation, we are creating the technical and regulatory basis at an early stage to best support the individual crypto strategies of our corporate customers”.

Federal bank Landesbank Baden-Württemberg (LBBW) plans to leverage Bitpanda’s institutional custody solution for its cryptocurrency offering. Bitpanda Custody, a crypto custody platform with decentralized finance (DeFi) functionalities, is registered with the Financial Conduct Authority (FCA) of the United Kingdom, as stated on Bitpanda’s website.

Gonzalo Lamas, head of global communication at Bitpanda, stated to Cointelegraph that the partnership will grant the bank access to Bitpanda’s digital asset platform, custody services, and relevant licenses. Lamas added:

“As part of this cooperation, LBBW leverages our “Investment-as-a-Service” infrastructure and services, which is used to source and provide custody services for cryptocurrencies such as Bitcoin, Ethereum, and other digital assets. The collaboration aims to enhance LBBW’s digital asset offerings, ensuring high security and innovative solutions for corporate clients.”

Preparing Ahead of MiCA Regulations

German banks and asset managers are intensifying their involvement in cryptoassets, providing custodial solutions and building proprietary products for this asset class in anticipation of forthcoming EU regulations – Markets in Crypto-Assets (MiCA) – expected later in the year. Deutsche Bank is in the process of developing its digital-asset custody service, while its DWS unit is collaborating within a consortium aimed at creating a euro-denominated stablecoin.

According to Vyara Savova, senior policy lead at the European Crypto Initiative, crypto exchanges will become fully regulated entities by the end of 2024. She also highlighted that 2024 marks a significant milestone for the EU with the implementation of the Markets in Crypto-Assets (MiCA) framework, providing a comprehensive legal framework for crypto-assets, crypto-asset services, and crypto-asset service providers (CASPs). Under MiCA, crypto exchanges fall under the category of CASPs and will be subject to full regulation by December 2024.

Moreover, the finalization of the MiCA bill is still underway, with the second consultation package for reverse solicitation guidelines scheduled to conclude on April 29. The outcome of this consultation will play a crucial role in shaping the final implementation of MiCA by December.

Additionally, Germany is also embracing crypto investment products citing global demand. Earlier this month, DWS joined hands with Galaxy Digital to launch Bitcoin and Ethereum ETCs, per the Crypto News Flash report.