German multinational investment banking Deutsche Bank AG, through its parent company, DWS Group, is looking to bet on companies focused on cryptocurrencies. As reported by Bloomberg, DWS Group is in talks to acquire a small stake in Deutsche Digital Assets (DDA), a boutique cryptocurrency company operating in Frankfurt, Germany.
DDA offers its customers exchange-traded products of cryptocurrencies, a product that has almost reached maturity in the German digital currency ecosystem. In addition to Deutsche Digital Assets, DWS is looking to enter into a strategic partnership with Tradias, a market-making company owned by Bankhaus Scheich.
Tradias is a renowned cryptocurrency startup that has clients in different industries. The company has been instructed by regulators in Frankfurt to sell some of the confiscated digital currencies in order to have little or no impact on the market.
Pursue transversal relevance to the market
Deutsche Bank's plans to expand its current reach into the digital currency ecosystem come as no surprise. Other traditional financial service providers are also stepping into this fledgling ecosystem. According to sources familiar with the matter, the German company is now evaluating the possibilities of remaining competitive through targeted diversification.
The anonymous sources also highlighted that the company is in talks with Galaxy Digital Holdings, the cryptocurrency company owned by popular investor Mike Novogratz. After garnering a bad reputation for greenwashing that has drawn investigations from regulators in the US and Germany, DWS Chief Executive Stefan Hoops is now looking to help revive the company's image.
While the move to the digital currency ecosystem represents a promising future for the company, Hoof will still struggle with growing industry scrutiny. These controls have come about following the recent crashes, most of which have been exacerbated by the implosion of the FTX Derivatives Exchange.
Ultimately, Hoops is building on his convictions, having been a staunch advocate of cryptocurrencies and new technologies to transform regional and global finance. The diversification plans of his approach to the investments and liquidity generation need to be amplified in general.
DWS Group saw its assets under management (AUM) plunge by €107 billion in fiscal 2022, while outflows reached €20 billion ($21,5 billion).
What impact will Deutsche Bank's investment plans have on Bitcoin?
While there have been no direct links to the Bitcoin (BTC) acquisition, Deutsche Bank's investment plans are set to have a direct impact on the premier cryptocurrency. If the deals of DDA, Tradias and Galaxy Digital go through, the company could have indirect exposure to Bitcoin in the medium to long term.
This upbeat sentiment is good for the digital currency, as an investment implies partner firms will have more capital to inject into the nascent asset class. Until plans are confirmed by all companies and the capital injection starts rolling in, these projections can be considered speculative. At the time of writing, Bitcoin is changing hands at $22.703,31, down 2,16% according to our data.