Not too long ago, many banks refused to align with cryptocurrency-related business and opted to stay away from digital assets. However, many banks are now embracing the ultimate reality following pressure from their customers and institutional clients.
Deutsche Bank has concluded plans to offer a digital asset custody service to its clients. It also plans to start a trading and issuance service. This is coming after the oldest bank in the U.S., BNY Mellon, joined the crypto custody service last week.
Deutsche Bank said it wants to roll out digital custody, including cryptocurrencies, to help clients manage their digital assets. Like BNY Mellon, Deutsche Bank said the decision is necessary because of the increasing demands of its clients on digital currencies.
When it rolls out the crypto custody service later this year, hopes to add the custody of top crypto assets such as Bitcoin and Ethereum. The bank has already started developing the multi-asset crypto custody ad administration platform which will be used to deal with both traditional and digital assets.
Digital assets present a different challenge
Some observers in the industry don’t think both banks are fully prepared for crypto custody, even though they are well established in the traditional banking setting.
Jean-Michel Palihon, the vice president of business solutions at Ledger, stated that traditional assets are not the same as crypto or digital assets. As a result, both types of assets present different challenges.
Crypto custody is still complex for institutions that are traditionally set for such dealings, so it will be naturally difficult for non-crypto-based institutions to roll into the industry.
Last year, cryptocurrency exchanger KuCoin lost $200 million due to a hacking incident, which crippled the company completely. Since there are lots of security challenges when it comes to keeping custody of digital assets, Adams advised custodians to invest more in security.
Co-founder of Hacken, Dyma Budorin, also pointed out that few firms like Binance, Gemini, and Kraken have remained stable and out of the news because they are investing so much in personal private keys management system.