DZ Bank, Germany’s second largest by assets, is working on a digital asset custody solution. The move is driven by client demand, less so for cryptocurrency and more for digital financial instruments, although the solution will handle both. On the securities settlement side, the bank is keen to see the European Central Bank progress toward a wholesale central bank digital currency (CBDC) to enable the settlement of distributed ledger (DLT) transactions.
The bank has been working on the strategy and design of the custody solution for some time and is in the process of appointing a consultant to help to implement the solution and assist with BaFin regulatory approval. At this stage, it is not planning to partner with one of the crypto custody technology firms but intends to develop its own offering.
Talking to Holger Meffert, who heads the bank’s securities management division, he clarified that a key driver is client demand. One of the bank’s biggest clients is Union Investment. While perhaps less well known internationally, Union has assets under management of €427 billion ($427bn), which is only 7% less than the famed American KKR. “For most of the funds that Union Investment has, we are their depository bank, so we should be able to cover their needs,” said Meffert.
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