Blockchain for Banking News

Boerse Stuttgart subsidiary to offer institutional digital asset custody

safe custody

Today the Boerse Stuttgart Group announced that its subsidiary blocknox plans to offer digital asset and cryptocurrency custody services to institutional investors.

The service started in a more limited context to support specific services. In January 2019, it was introduced for the BISON app and later in September for the Boerse Stuttgart Digital Exchange (BSDEX). The latest announcement is an expansion of services to fintechs, banks and asset managers.

“As a pioneer in Germany, blocknox has already been operating as a custodian of cryptocurrencies for more than one year. Now we want institutional clients to benefit from our experience and set-up as well. They can use blocknox’s reliable custody as a building block for their own services around digital assets,” said Dr Ulli Spankowski, Managing Director of blocknox GmbH.

But blocknox will face considerable competition. We reported last week that 40 banks had approached the German regulator BaFin expressing an interest in getting into the digital asset custody business. However, blocknox has a slight timing lead over the banks.

On January 1st, new crypto custody regulations came into force in Germany as part of incorporating the latest EU Money Laundering Directive into its Banking Act (KWG). Banks and others can express an interest and apply for a custody license.

But for existing non-bank crypto custodians such as blocknox, there’s a transition period. That means in the interim blocknox is considered as if it were provisionally licensed, having already expressed an interest in getting a license. It will need to make an application later.

“We welcome the regulation of crypto custody as a reasonable step towards further professionalisation of the industry. Thanks to the new legislation, more institutional players are likely to enter the crypto market. We look forward to supporting them as a custody provider,” said Dr Spankowski.

Last year Japanese investor SBI which has numerous blockchain and cryptocurrency investments bought a stake in the Boerse Stuttgart Digital Exchange (BSDEX). Until that point, Boerse Stuttgart owned 70% with Axel Springer and holding the balance.

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