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2nd February 2024 > > DZ Bank & crypto adoption.


tl;dr

The CCC news floor is a robust environment. DZ Bank proves its credentials once more as a crypto innovator.


Market Snap








Market Wrap

Bond markets are saying yah-boo-sucks to Jerome Powell’s overly pessimistic belief in the future direction of interest rates. This provides a more benign backdrop for all risk assets than the one we have seen for a few weeks at least.


It is quaint that he believes that by keeping rates unchanged in the US he can combat global supply chain induced inflation. He might have a point if the Houthis are scared enough by his actions in bravely keeping rates constant that they will stop waging war in the Red Sea. The CCC team has reached out to Abdul-Malik Badruldeen al-Houthi, leader of the Houthis, to ask him if Powell’s actions will lead him to reconsider the actions of his terrorist organisation, but there has been no response so far as today’s CCC goes to print.


Occasional Series – The CCC is not woke

Whilst I am in charge – however briefly – of editorial policy at CCC Towers, wokeism has no place here.


Nonetheless, I cannot help but notice a lack of diversity in this photo:














Anyone who points out that I do not know the stated gender of any of these individuals, I concede you are right about that. Perhaps name badges with self-affirmed pronouns might help resolve this conundrum?


Curious Cryptos’ Commentary – DZ Bank

On 27th of November 2023 the CCC reported that DZ Bank had announced its own crypto custody solution for institutional investors with an equivalent product for retail investors in the pipeline.


Dr. Holger Meffert, Head of Securities Services & Digital Storage at DZ, explained at the time:


“We assume that within the next ten years, significant shares of the capital market business will be processed via distributed ledger technology (DLT) based infrastructures. In the medium term, we see the DLT as a complementary technology to the established infrastructures in the existing capital market processes.”


Many of you may not have heard of DZ Bank, which just happens to be the second largest bank in Germany. Its USP is an unprecedented access to a retail investor base the envy of banks worldwide, due to its functioning as the intermediary for over 700 co-operative lenders, who are the majority shareholders of DZ Bank. I know, the German banking industry is complicated, and unique in many ways.


DZ Bank has gone a step further for retail with an announcement of a pilot program enabling trading cryptos for its own clients and the clients of that multitude of co-operative lenders. DZ itself has $630bn assets under management. The co-operative lenders have a total of $1.2 TRILLION AUM, so a total combined AUM that is double the current market cap of BTC.


DZ Bank is merely responding to client demands, a client base that is effectively fire-walled from all other financial organisations in many respects, and most certainly cannot invest in the crop of spot BTC ETFs launched in the US.


We can argue all day long whether the world’s assets will become invested at 1% or 5% into cryptos, or somewhere in between, but regardless of your opinion on that topic, this is a new and significant demand base for BTC.

 …


The CCC also commented back in November in relation to Holger’s comment above that:


“Capital market transactions are measured in the trillions every day. Efficiency in the execution and recording of these transactions is key not just to banks, but to society, as a means of reducing the cost of capital for businesses as they grow. DLT is the most powerful tool for achieving that end.


No use cases for blockchain technology? Pah to you, Sir.”


And this is the other also very shiny side of this very shiny coin.

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