Germany

Taurus starts credit tokenization as an asset class for German SMEs

Blockchain tokenization provides an alternative means for SMEs to raise capital and liquidity while building diversified investment opportunities.

Teylor, a German-based fintech firm specializing in digitizing small business loans, has joined forces with digital asset infrastructure provider Taurus to turn small and medium enterprise (SME) loans into tokenized assets and provide tokenholders with monthly cashflows.

In the partnership, Teylor originates and manages SME loans through its Teylor credit platform. By tokenizing part of this credit portfolio on the Taurus infrastructure and TDX-regulated marketplace, professional private debt investors could participate in the returns through a secure blockchain-based secondary market.

Blockchain tokenization provides an alternative means for SMEs to raise capital and build liquidity while building diversified investment opportunities. In 2021, Italy’s Azimut group tokenized its first portfolio of loans to Italian SMEs through Sygnum Bank.

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What’s next for EU’s crypto industry as European Parliament passes MiCA?

What is the potential impact of MiCA on the EU crypto and blockchain market, and what other regulations can be expected for this rapidly evolving industry?

On April 20, the European Parliament voted to pass the Markets in Crypto-Assets (MiCA) regulation, the European Union’s main legislative proposal to oversee the crypto industry in its member countries. 

The MiCA regulation is a significant development for the crypto industry in the European Union. Prior to MiCA, crypto companies had to comply with 27 different regulatory frameworks across the EU member states, with Germany or France being costly and burdensome, for example.

Under MiCA, however, EU-wide regulations will apply, allowing companies to operate throughout the entire EU crypto market with a MiCA license granted in one country. This will increase the competitiveness of EU startups and may result in them gaining market share from unregulated competitors.

MiCA will increase the EU’s competitiveness

Moreover, MiCA could encourage more institutional adoption and activity in the EU crypto and blockchain market. Patrick Hansen, director of EU strategy and policy at stablecoin issuer Circle, told Cointelegraph that MiCA will enable European crypto firms to scale and grow faster, allowing licensed companies to offer their services throughout the world’s largest single market, with roughly 450 million people:

“The legal clarity will also foster innovation amongst financial institutions that have been previously hesitant to launch products and services due to regulatory uncertainty. Additionally, as MiCA is the first comprehensive regulatory framework for crypto assets from a major jurisdiction in the world, it is likely to attract considerable foreign capital and talent to the region.”

For Moritz Schildt, a board member of the Hanseatic Blockchain Institute and the German Blockchain Association, the biggest advantage of MiCA is that “it will come into force already this year,” giving the EU a chance to provide a unified regulatory framework for crypto assets and related providers.

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Creating a regulatory framework for a technology that sees new developments and outgrowths practically every month and evolves as dynamically as the tokenization of investment opportunities is “very challenging.”

“It should come as no surprise, therefore, that some regulations are not yet optimal and that questions about concrete applications remain unanswered,” Schildt said, adding that with MiCA, Europe has the opportunity to position itself “as a location for innovation and quality.”

Unregulated companies out of the EU crypto market

Peter Grosskopf, co-founder of decentralized finance (DeFi) project Unstoppable Finance, is also convinced that MiCA will benefit the EU crypto and blockchain market. First, companies from outside Europe will have to register with a company in the EU, so there is a “direct impact on job creation and tax payments.”

Second, many jurisdictions take an overly strict approach to regulating crypto. For example, “the U.S. does regulation by enforcement.” Compared with other regions, the EU will become “a safe space for the industry as a whole, and innovators from around the world will start to build their businesses here,” Grosskopf said.

Stefan Berger also noted that the United States is currently cracking down on the crypto sector. According to the German politician and European Union Parliament rapporteur for MiCA, the European crypto asset industry has regulatory clarity that the United States doesn’t, and it would be wise for U.S. lawmakers to take a cue from MiCA:

“For me, the biggest advantage is that we create trust, which is a crucial booster, especially for young technologies like blockchain. I expect regulation to become a global standard-setter over time. A global MiCA would be desirable at some point.”

NFT regulation unavoidable

Through MiCA, European policymakers are trying to create a reliable framework that builds trust through legal certainty. This includes a uniform classification of assets and the requirement for coin issuers to provide a white paper that discloses all relevant information about the coins, such as their energy consumption and environmental impact.

In addition, MiCA will ensure that every new token is reviewed for approval to check that the business model does not threaten the stability of the cryptocurrency, which creates more transparency for investors.

But the crypto and blockchain sector is constantly evolving. “Tokenization is not hype and will become an integral part of our lives and financial world,” said Berger. More and more business models are emerging based on nonfungible tokens (NFTs), for example, which have been largely exempt from MiCA. (The new regulation will only address crypto-asset service providers that offer services for NFTs).

But according to Berger, NFTs are next on the docket, with European lawmakers looking at what type of regulation would benefit the industry and consumers.

Schildt also expects further regulations on NFTs relatively soon. “We should reconsider the traditional classification of investment products.” According to the expert, in the future, investments “that were previously considered ‘art collections,’ we will also qualify as capital investments.”

DeFi is a hot topic in European policy making

Some aspects of MiCA have yet to be defined through upcoming technical standards and guidelines.

For example, what are the specific liquidity requirements for electronic money token reserves? EU regulators will develop these standards over the next 12 to 18 months, and “the practical success of MiCA will largely depend on this implementation work — also referred to as Level 2 legislation,” Circle’s Hansen said.

Hansen further noted that, beyond MiCA, EU institutions are finalizing a new Anti-Money Laundering (AML) rulebook that will be “critical for crypto firms.”

Another critical review is that of PSD2, the EU’s main payments directive, which will also significantly impact crypto firms.

And finally, in about 18 months, the European Commission will publish a detailed report on DeFi and may take further legislative steps to regulate the space. “Brussels prides itself on being a global regulatory leader, and MiCA is just the first of many steps to come,” said Hansen.

Unstoppable Finance’s Grosskopf also expects DeFi regulation to become a hot topic following the next round of elections in Europe, as MiCA will not apply to “crypto-asset services provided in a fully decentralised manner without any intermediary.”

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“I think it’s important to be proactive and start thinking about how to regulate DeFi as early as possible in order to influence the process,” he said, stating that the new AML regulation is currently under discussion and will most likely become a reality before MiCA.

Although it’s still unclear exactly how European lawmakers will regulate NFT and DeFi or whether there will be new requirements regarding smart contracts, the success of the first step toward regulation — MiCA — could provide a significant boost to both EU crypto businesses and the EU economy as a whole. However, whether this success is realized will depend on the practical implementation standards developed in the future.

Crypto in Europe: Economist breaks down MiCA and future of stablecoins

A principal economist of the European Commission shares his views on stablecoins and the future of regulations in Europe.

In October 2022, the European Union finalized the text of its regulatory framework called Markets in Crypto-Assets or MiCA. The final vote on the new regulation is scheduled for April 19, 2023, meaning the days of an unregulated crypto market in the EU may soon be over. The MiCA regulations introduce clear guidelines for handling cryptocurrencies and consumer protection, and divide crypto assets into different sectors, each subject to specific rules.

The European Commission — the executive branch of the EU responsible for proposing new laws — first proposed the far-reaching regulations in 2020. The MiCA would apply to crypto service providers and issuers of digital assets in 27 EU member countries. By proposing to regulate crypto assets, the European Commission has taken a bold step, displaying the capacity and will to address complex issues creatively.

Joachim Schwerin is the principal economist at the Digital Transformation of Industry unit within the European Commission’s Directorate General for the Internal Market, Industry, Entrepreneurship and SMEs (DG GROW).

Schwerin is responsible for policy development regarding various aspects of token creation, its distribution and regulation (token economy), and the economic applications of distributed ledger technologies.

In 2020, Schwerin coordinated DG GROW’s input into the EU’s Digital Finance Strategy, including MiCA. Speaking to Cointelegraph, Schwerin shared his views on the importance of MiCA, the role of stablecoins, and why he hasn’t ever questioned the merits of blockchain and crypto, even in the wake of Terra’s collapse or the FTX crash.

“We want to develop and promote, not slow down”

With MiCA, the European Commission has adopted a regulatory framework that should minimize the negative consequences of incidents like the insolvencies of FTX and BlockFi in the future. The law was not in force at the time of the FTX case, but Schwerin hopes it will come as soon as possible, saying this should “clearly underpin the precautionary principle.”

“We promote the crypto sector and want to support its organic, market-driven development. The many positive opportunities should be recognized and used. It is like in sports here: Defending can make sense in certain phases of the game, but mostly defending means that a team is too bad to take the game into its own hands. We want to develop and promote, not slow down.”

For Schwerin, FTX was a typical case of an emerging and relatively unregulated industry finding its footing and developing its products and services. Indeed, he stated incidents like FTX and Terra’s collapse provided a chance for the cryptocurrency community to rally, condemn illicit behaviors and work to rebuild the industry’s reputation.

The crypto community is now focusing even more on better rule-setting and compliance in regulated or soon-to-be-regulated environments. It’s also looking more at truly decentralized mechanisms to reduce the potential for error by empowered individuals, Schwering added.

“All of this is positive and does not change the narrative of crypto as a success story with much more future potential.”

Blockchain as a philosophy

Schwerin sees the benefit of blockchain technology primarily in applications for the real economy. He said that Bitcoin (BTC) and other cryptocurrencies are “nice and fascinating with lasting significance,” but these are private concepts and “we don’t need to spend public resources on them.”

Schwerin is confident that the benefits for small businesses and the general population must be evident if the government will tackle something with public resources. And this is precisely the potential that blockchain has:

“That’s why, from the beginning, we didn’t see blockchain primarily as a technology but as a philosophy. [We saw it] as something that enables a true form of decentralization that creates trust; trustworthy technology that also opens up market opportunities for small businesses worldwide and allows many people with the same interests — but who don’t know each other — to come together digitally in the real world and develop projects.”

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The European Commission had this understanding of blockchain technology in mind when discussing dubious initial coin offerings from 2017 to 2018, or that money laundering was supposedly easier with crypto.

But European regulators understood that blockchain technology’s nature — thanks to its transparency and traceability — makes it much easier to track crypto transactions, and distinguish between regular and illicit activities on-chain.

According to Schwerin, financial crime related to cryptocurrencies is much lower than in traditional forms of finance.

“That is why we did not depend on any examples of criminality or the Terra case, just as we did not depend on FTX or any next case of that sort, but we were and are 100% convinced of the technology. We got involved with it early on, and because of that, we had already learned so much by then that we were in a position to work on the MiCA regulation in record time.”

But what about stablecoins?

After the collapse of the Terra ecosystem, the European Central Bank (ECB) issued a report claiming that stablecoins posed a threat to financial stability, but Schwerin does not share this view.

According to him, society needs stablecoins in many different forms because they have important functions within the crypto space, like cushioning price fluctuations and facilitating transactions; this is why the European Commission has allowed stablecoins in principle in the MiCA regulation.

“We have not banned anything, but we have developed basic rules for private stablecoin issuers that we think are reasonable. For example, they must have appropriate minimum liquidity as a reserve”.

Regarding Terra, Schwerin sees the whole thing as a learning process, saying, “The next similar project will simply be better because people have already had this experience. It is a natural evolution of innovation.”

Despite this, there are doubts about whether stablecoins will find a home in the EU. The largest stablecoins — Tether (USDT) and USD Coin (USDC) — are pegged to the United States dollar, with Circle’s euro-pegged stablecoin also issued outside the eurozone. When MiCA comes into force, should we expect more euro stablecoins?

Schwerin hasn’t ruled out the emergence of new euro stablecoins in the EU, but he isn’t expectant either. He says that the macroeconomic context, geopolitics, monetary policy and the euro are simply not moving in that direction.

The MiCA alone is unlikely to significantly increase the number of euro-denominated stablecoins in the euro area, Schwerin stated. “However, MiCA could help us to become more open to stablecoins as a whole.”

When asked whether MiCA could become a ground-breaking global regulatory standard, Schwerin said he sees great interest from other countries, especially the United States. In his view, MiCA is a particularly good example of a regulatory approach that is both innovative and liberal for global regulation of the financial sector.

“However, even though MiCA is ready, we have to be aware of the pace of innovation in the crypto sector and the new challenges it will bring. It was, is and continues to be a long process of learning.”

The views expressed in this interview are those of Schwerin personally and do not reflect or represent the official position of the European Commission.

Germany plans to issue electronic shares on blockchain, boost startups

Under the Future Finance Act, the German government is pushing for more welcoming regulations for startups working with financial innovation.

The German government is pushing for more welcoming regulations for startups working with financial innovation in the country, according to the newly drafted legislation of the “Future Finance Act” introduced by the finance ministry on April 5. 

Key goals of the legislation include capital markets digitalization through the issuance of electronic securities on a blockchain and improved portability of crypto assets. According to a translated version of the draft bill, Germany’s “capital market should become more modern and efficient in order to mobilize more private capital for future investments.”

Among the government’s targets is to create a favorable environment for startups and investors in the country. The legislation reduces the minimum market capital for initial public offerings (IPOs) from 1.25 million euros ($1.37 million) to 1 million euros ($1.1 million) and facilitates investments by institutional players in startups, small businesses, and special purpose acquisition companies (SPACs).

According to local media reports, the new rules would apply to businesses employing up to 500 people and with revenues below 100 million euros ($109 million).

“We want to make Germany the leading location for startups and growth companies,” German finance minister Christian Lindner said in a statement. “That is why we are improving access to the capital market and making it easier to raise equity. Small and medium-sized companies will also benefit from this.” 

The government claims the move would make Germany more attractive to investors and promote a culture of stock market investments. “Startups, growth companies and small and medium-sized companies should have easier access to the capital market,” the minister said.

Germany is a member of the G7, a group of the world’s seven biggest democracies. Together, G7 members are working on tougher crypto regulations, which many in the industry believe could stymie innovation and growth. The G7’s new agenda is expected to be disclosed at its next meeting in Hiroshima, Japan, which is scheduled for May.

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Boerse Stuttgart Digital subsidiary receives final approval for crypto custody

With the licensing of the German exchange’s blocknox service, it now offers fully regulated brokerage, trading and custody.

Boerse Stuttgart Digital, the digital asset brand of the Boerse Stuttgart exchange group, announced March 30 that its blocknox service had received final licensing from the German Federal Financial Supervisory Authority (BaFin) to operate as a crypto custodian. Boerse Stuttgart Group now offers fully regulated brokerage, trading, and custody of digital assets, it said.

Its final licensing makes Boerse Stuttgart Digital the first “established market participant […] Licensed to hold cryptocurrencies in custody without any acquisitions,” Boerse Stuttgart Group CEO Matthias Voelkel said. Boerse Stuttgart Digital said European banks, brokers, asset managers and family offices could incorporate its services into their own offerings. It operates exchanges in Germany, Sweden and Switzerland and has an office in Ljubljana, Slovenia, as well.

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Bitcoin Group SE, operator of the German bitcoin.de crypto trading platform, acquired Bankhaus von der Heydt, which was licensed for crypto custody, in December. German asset manager DZ Bank partnered with Swiss Metaco to offer crypto services, including custody, in February.

Boerse Stuttgart Digital has been providing custody services through blocknox under a provisional license since crypto custody regulations were introduced in Germany on Jan. 1, 2020. It had begun offering trading services to German residents in the prior month and introduced a trading app in 2021. Boerse Stuttgart Digital received its final custody licensing ahead of several other contenders, including Binance.

Global exchange group Nasdaq announced plans on March 24 to set up a limited-purpose trust company to offer crypto custody services under the supervision of the New York Department of Financial Services. This comes after the United States Securities and Exchange Commission moved to impose new rules making it harder for cryptocurrency exchanges to custody crypto by expanding rules originally formulated in 2009.

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German Dwpbank to offer Bitcoin trading to 1,200 affiliate banks on new platform

Securities processor Deutsche WertpapierService Bank will provide its affiliates with seamless integration with their current offerings, with more digital assets to come.

Deutsche WertpapierService Bank (Dwpbank), which offers securities processing to around 1,200 banks in Germany, is creating a new platform, wpNex, that will offer Bitcoin (BTC) to all of its affiliates’ retail customers in the second half of this year. 

The new service will feature crypto accounts alongside bank customers’ other accounts and will not require additional Know Your Customer procedures, according to local media reports.

Wallet-as-a-service provider Tangany and Bankhaus Scheich’s Tradias digital asset trading service will also participate in the new offering. Retail customers will not hold private keys. Dwpbank CEO Heiko Beck said the bank planned to add other cryptocurrencies, digital assets and tokenized securities to the service in the future.

MLB Banking was the first Dwpbank affiliate to sign on to the platform and has already performed a transaction on it. MLP Banking’s account and securities processing head, Paul Utzat, said in a statement:

“In our MLP customer portal, it is a logical addition to the existing wealth management offering.”

Crypto accounts are linked to euro cash accounts, so transactions can take place without going through a separate payments account.

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Germany has been named one of the world’s most favorable countries for crypto. DZ Bank announced in February that it was adding crypto to its asset management service. DZ Bank is Germany’s second-largest bank by assets and a central institution for a network of bank coops with 8,500 branch offices.

German crypto bank Nuri, however, shut down in November under stress of the crypto bear market. It had half a million customers. On the traditional finance side, Deutsche Bank shares plummeted on March 24 as instability spread among European banks. Deutsche Bank asset management division DWS was reportedly in talks with tradias on investment in the service.

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European banks head into another weekend of uncertainty as default risks surge

An indicator of European bank default risk soars and stocks tumble on March 24 amid renewed fears surrounding the financial system.

European banks are going into the weekend with renewed fears surrounding their future, as shares of Deutsche Bank plunged over 7% on the New York Stock Exchange on March 24 after a down day on Frankfurt’s markets. 

Deutsche Bank shares were impacted by an increase in the cost of insuring against its potential default risk. The German bank’s five-year credit default swaps, known as CDS, climbed 19 basis points (bps) from the previous day, closing at 222 bps, according to Reuters, which cited S&P Global Market Intelligence data. On March 23, the bank’s CDS rose to 173 bps from 142 bps the previous day.

According to Investopedia, a credit default swap allows an investor to swap or offset their credit risk with another investor. Lenders concerned about a borrower’s default often use a CDS to hedge that risk. During periods of uncertainty, market participants generally assign a higher price to protection.

Deutsche Bank’s credit default swaps have soared. Source: MacroVar

Fears about European banks are not limited to Deutsche. UBS’s five-year CDS reportedly jumped up 14 bps on March 24 to close to 130 bps, just a few days after the company acquired troubled competitor Credit Suisse for $3.25 billion as part of an “emergency ordinance” to prevent financial market instability in the region. Under the agreement, the Swiss National Bank has committed to providing UBS with over $100 billion in liquidity.

The rescue of Credit Suisse has not stemmed widespread investor uncertainty about the European banking system. On March 24, shares of Commerzbank declined by as much as 9%, while Société Générale and UBS tumbled over 7% in European trading. Deutsche shares are down over 25% in the past 30 days.

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“Deutsche Bank [situation] indicates that we are only at the beginning of what looks to be a widening crisis within the Global Banking System,” Danny Oyekan, CEO of digital investment firm Dan Holdings, told Cointelegraph in a written statement. “This shouldn’t be all that surprising given the whipsaw of going from a zero-interest-rate environment to the fastest rate hikes in recent history. So many banks got caught up in a duration trap of sorts, having bought long-dated bonds that have since seen their value eviscerated by the Fed’s rate hikes.”

One of the banks trapped in this environment was the U.S.-based Silicon Valley Bank, which collapsed on March 10, requiring regulators in the United States and the United Kingdom to curb a potential ripple effect across the banking system. However, a similar failure for Deutsche Bank or other European banks is unlikely to happen, according to Ilya Volkov, CEO of the Swiss fintech platform YouHodler. In a comment to Cointelegraph, Volkov said: 

“Silicon Valley Bank was not subjected to the Liquidity Coverage Ratio (LCR) as banks are in Europe. The LCR requires banks to keep enough high-quality liquid assets (HQLA) on hand. This is so that in the event of a high-stress scenario, these assets can be sold to fund banks.”

While the banking industry struggles with uncertainty, Bitcoin (BTC) continues to trade near $28,000 at the time of writing, gaining roughly 17% in the last 30 days. “Bitcoin has performed well in this environment, and this is a testament to its value as a decentralized and secure store of value with a limited supply,” said Oyekan. 

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German regulator BaFin suggests a ‘case-by-case’ approach for NFTs

Given the difficulties with classification, BaFin highlights the freedom of nonfungible tokens from licensing demands.

The Federal Financial Supervisory Authority of Germany (BaFin) is not ready to classify nonfungible tokens (NFTs) as securities. The agency suggests classifying the NFTs on a case-by-case basis. 

On March 8, the BaFin journal published an explanatory note considering NFTs legal classification. At this point, the regulators don’t see how NFTs meet the criteria to be considered securities. However, in the future, BaFin may consider NFTs as securities if, for example, 1,000 NFTs embody the same repayment and interest claims.

According to another reservation, if an NFT contains documentation of exploitation rights or ownership, such as a promise of distribution, it could be considered an investment.

The agency recommends a case-by-case approach to classifying NFTs as a “crypto asset.” But, according to BaFin, the chance that NFTs will represent a “crypto asset” is even smaller than the investment classification, given the lack of immediate exchangeability. The lack of standardization also spares NFTs of “e-money” status.

Given the difficulties with classification, BaFin doesn’t expect NFTs to comply with the licensing requirements of the Payment Services Supervision Act. And, except for fungibles, which fall under the financial instrument category, NFTs are also free of BaFin’s Anti-Money Laundering supervision. NFTs separately considered “crypto assets” would need to comply with AML supervision.

Related: German DZ Bank adds digital currencies to asset management services

According to the metaverse platform Metajuice, almost three out of four of the NFT collectors on its platform purchase NFTs for status, uniqueness and aesthetics. Only 13% percent of survey participants said they buy NFTs to resell them in the future.

German DekaBank plans to launch tokenization platform by 2024

DekaBank’s partnership with Metaco is not about cryptocurrencies like Bitcoin but the tokenization of bonds and stocks.

105-year-old German bank DekaBank is planning to launch a blockchain-based tokenization platform in collaboration with the digital asset firm Metaco.

DekaBank targets the release of its blockchain platform sometime in 2024, while the infrastructure is expected to be ready in 2023, DekaBank’s digital asset custody executive Andreas Sack told Cointelegraph.

“The tokenization platform infrastructure will be ready in the foreseeable future, and that will launch the first minimum viable product in our crypto custody solution,” Sack stated. He added that the first test transactions of the tokenization platform are likely to take place this year.

DekaBank’s upcoming blockchain platform is developed in collaboration with the digital asset management system Metaco Harmonize. The bank officially announced a partnership with Metaco on Jan. 31, planning to deploy Harmonize as the core platform for an “institutional digital asset offering.”

Source: Metaco

According to Sack, the upcoming offering will involve tokenizing assets like bonds, stocks and funds in order to enable a new token economy. “Metaco is the key to this economy because it is our key management solution for tokenized assets on different blockchains,” he said.

The exec noted that plenty of blockchains are used for tokenization, including the Ethereum and Polygon networks. “It is not yet clear if there is one blockchain that will become the standard,” he added.

Related: HSBC needs someone to helm its tokenization efforts

Sack emphasized that DekaBank is not planning to offer trading of cryptocurrencies like Bitcoin (BTC) as part of its partnership with Metaco. That is because DekaBank is focused on regulated products, according to the German Electronic Securities Act, he said, adding:

“Cryptocurrencies are tradable around the world, more regulated in some parts of the world, and less to not regulated in other parts of the world. The implications that can arise due to these disparities are potentially very large and can carry very high risks.”

The new details about DekaBank’s upcoming digital asset platform come amid some major local banks moving into the cryptocurrency industry. DWS Group, the asset management arm of Deutsche Bank — one of the world’s leading financial service providers — is reportedly seeking to invest in two German crypto companies, including Deutsche Digital Assets and Tradias.

According to some rankings, Germany became the most favorable crypto economy in the world in 2022, based on factors like a favorable crypto outlook, clear crypto tax rules and transparent regulatory communications. German financial authority BaFin has issued multiple licenses to crypto exchanges, including firms like Coinbase and Bitpanda.

Deutsche Bank’s DWS eyes 2 German crypto firms for investment: Report

Companies negotiating with DWS Group include Deutsche Digital Assets, a crypto exchange-traded products provider, and market maker Tradias.

Deutsche Bank’s asset management arm is reportedly in discussions to invest in two German crypto companies.

According to a Feb. 8 Bloomberg report citing “people familiar with the matter,” DWS Group CEO Stefan Hoops is currently in talks to buy a minority stake in Deutsche Digital Assets, a crypto exchange-traded products provider. It’s also in talks with Tradias, a market maker firm owned by Bankhaus Scheich — a traditional finance market maker.

Hoops has been bullish about the opportunities presented in the digital assets space.

During a recent earnings call, the executive said that DWS has “started to assess strategic partners and commence due diligence on potential targets” where it expects to gain a foothold, including digital assets.

The downturn in digital asset prices could result in “interesting opportunities” for DWS, he said.

Speaking about the bank’s strategy for the crypto industry, Hoops mentioned a plan to build or acquire “various specific blockchain-related services.”

According to Deutsche Digital Assets’ website, the firm offers investors exposure to crypto assets through a variety of investment vehicles, ranging from passive to actively managed funds, as well as white-labeling services for asset managers. 

Tradias is an over-the-counter (OTC) trading platform for cryptocurrencies and security tokens created by Bankhaus Scheich in 2020, providing crypto loans and liquidity services.

Related: Euro-pegged stablecoin powered by Ethereum launches in Finland

The crypto investment play is reportedly amid efforts by DWS to revive growth and regain reputation after tax fraud and greenwashing allegations led to probes in Germany and the United States.

DWS and Deutsche Bank offices were raided in May 2022 by Frankfurt prosecutors, after they found “sufficient evidence” that ESG standards were applied only to a minority of assets, contrary to their marketing claims.

Germany is considered to have one of the friendliest tax regimes for long-term crypto holders, as the country charges zero capital gains tax on the sale of crypto held for over a year.

According to an October crypto ranking that evaluates factors such as crypto outlook, clear crypto tax rules, and more transparent regulatory communication, Germany ranks among the most favorable crypto economies.