Germany’s Traditional Markets Underwater, So It’s Now Turning To Crypto

Key Takeaways:

  • German DZ Bank now offers crypto custody to its institutional clients.
  • Local financial institutions don’t want to miss out on a new growing market.
  • Meanwhile, industrial production, the pillar of the German economy, declined beyond estimates.
Germany crypto market gets good news in DB Bank
Germany crypto market gets good news in DB Bank

YEREVAN ( — DZ Bank announced on Nov. 2 that it would offer a digital custody platform to its institutional investors. With over 300 billion euros in assets, DZ Bank is the second largest bank in Germany by asset size and the central institution for around 800 cooperative banks and their nearly 8,500 branch offices.

Germany’s DZ Bank Lures Customers with Crypto

The financial institution noted that the new service includes a crypto bond from Siemens, which Union Investment and DZ Bank subscribed to six months ago and which could now be transferred to self-custody. 

Meanwhile, the bank had previously been involved as processor and custodian in the first external transaction of crypto fund shares from Bankhaus Metzler, a private banking company in Frankfurt. Since both cases fall within the scope of the Electronic Securities Act (eWpG), custody is already possible with the existing licenses.

However, to comply with the local crypto regulations, DZ Bank also applied for a specific crypto custody license from the Federal Financial Supervisory Authority (BaFin) in June. Additionally, parallel to the solution for institutional customers, the bank is working on an offer that will allow private customers to invest directly in cryptocurrencies.

Incidentally, DZ Bank stock lost nearly 10% of its price per share in the previous two years. The lean towards crypto could be a way to remedy the situation by luring more customers with diverse service offers.

DZ Bank share prices. Source:
DZ Bank share prices. Source:

Financial Institutions Can’t Ignore Crypto

While generally conservative in their asset choice, German financial institutions have started inching closer to crypto in 2023. For example, asset management group DWS, majority-owned by Deutsche Bank, gave investors access to digital assets in April 2023.

The institution started working on a crypto-based exchange-traded product with Galaxy Digital, a digital asset and blockchain company. Notably, the partnership is largely aimed at institutional investors — such as companies and foundations, not retail customers, despite their growing number.

Crypto users in Germany. Source:
Crypto users in Germany. Source:

However, it is a distinct step towards the crypto sector for DWS, not away from it. Moreover, DWS has over a thousand affiliate banks, which could also adopt the strategy in the future.

Germany’s GDP Shrinks Beyond Expectations

The vector towards adopting crypto-based services came amid worrying signs from the German fiat economy. After the crippling Covid-19 pandemic and the subsequent money-printing strategy, German industrial output declined for the fourth consecutive month in September.

According to Bloomberg, production in the country declined a whopping 1.4% against the expected 0.1%.

German industrial production fell beyond estimates
German industrial production fell beyond estimates. Source:

Despite Gross Domestic Product (DGP) recovering from its post-Covid plunge, the index stood at 107.9 in Q3, a 0.1% drop from Q2.

Germany GDP. Source:
Germany GDP. Source:

Moreover, the Israel-Hamas war wreaked havoc on the European economy, raising oil prices. Germany, the first economy in Europe, relies on manufacturers more than many peers for growth. However, the local companies are reeling from costly energy and a slowdown in China.

For example, as announced on Nov. 7, chemical company Lanxess AG could face lower-than-expected earnings, and cut its dividend, the portion of the company’s net profits that is allocated to shareholders.

However, despite the rising recession risks, the European Central Bank (ECB) further raised its interest rates by 25 bps to 4.5% on Sep 20.

Industrial production in Europe. Source: Holger Zschaepitz on
Industrial production in Europe. Source: Holger Zschaepitz on

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