Important news for the crypto sector from Deutsche Bank, the $1.4 trillion German asset manager, which, with regard to regulation of the sector, has applied for a regulatory license to operate the cryptocurrency custody service.
Let’s take a detailed look at what this means and other important considerations and news on the matter.
Summary
Deutsche Bank in favor of crypto regulation
As anticipated, Deutsche Bank is taking important steps regarding crypto regulation. Specifically, it recently applied for a license to operate the cryptocurrency custody service, as we read:
While we remain cautious, this is one factor that could lead one to think about future and potential mass adoption of the blockchain industry.
Certainly, Deutsche Bank’s decision represents an important step forward on the part of the German asset manager, while also highlighting a difference from everything else that is happening in the US with regard to crypto regulation.
Indeed, as we know, in the US there have been several lawsuits implemented by the SEC against major crypto exchanges, including Binance and Coinbase.Â
Lawsuits that have led to speculation, albeit without any certainty, of the crypto giants leaving the US, at least for the time being.
In other words, it seems that almost everyone, in one way or another, is trying to delve into the sector, while the United States, according to some, is implementing a real war against cryptocurrencies.Â
In conclusion, everything points to the fact that something good is in the works for cryptocurrencies in Germany, although it will have to wait.
Deutsche Bank: “CBDCs will replace cash in the long run.”
According to Deutsche Bank’s research team, central bank digital currencies (CBDCs) will take the place of cash in the long term.
Indeed, in the latest edition of their periodical “Konzept,” published Tuesday, the bank pointed out that the coronavirus pandemic has accelerated the use of digital payments over cash, and this trend will eventually lead to CBDCs replacing cash.
However, according to Marion Laboure, macro strategist at Deutsche Bank, many countries are lagging behind in their progress toward digital currencies. China and Sweden, for example, are leading the development of digital currencies.
However, if other countries do not adapt, they may be forced to adopt other countries’ digital currencies and payment policies as a necessary measure for their businesses, Laboure said.
The United States and Europe, in particular, need to accelerate their development in this area, according to Laboure, who says their progress is “too slow.” Although both countries have conducted studies on CBDCs, they appear to be in no hurry to issue them.
Issuance and adoption of CBDCs: Deutsche Bank’s view
According to Laboure of Deutsche Bank, developed nations face two key challenges in issuing and adopting CBDCs: low interest rates and cultural norms on privacy.
In fact, Laboure argues that CBDCs could be useful in the current environment of negative real interest rates.
Currently, consumers have little incentive to deposit or save money, so it is unlikely that there will be a massive transfer of money from ‘mattresses’ to short-term bank accounts, Laboure explained.
Moreover, considering that bank accounts offer low interest rates, a CBDC could facilitate disintermediation of the banking system by allowing people to hold their funds directly with the central bank.
Regarding privacy, Laboure notes that perspectives on this issue vary from culture to culture. For example, in China only one-tenth of respondents to Deutsche Bank’s survey expressed concern about anonymity and traceability.
In contrast, people in advanced economies are more concerned about privacy, the survey indicated. Since the development of CBDCs will take time, Laboure suggests that in the meantime countries should prioritize their digital payment systems.
For example, European nations should develop an independent European payment solution, similar to Swish in Sweden, Laboure suggested.
Laboure also said that regionally, the wide spread of smartphones, the launch of 5G technology and advances in digital ledger or blockchain technology could disrupt traditional card payment systems.
