Deutsche Bank AG’s asset management arm, DWS Group, is currently in talks with two German cryptocurrency firms over minority stake acquisitions.
The investment is part of DWS’s efforts to revive growth and investor confidence, Bloomberg reported Wednesday, citing people familiar with the matter.
DWS Group to Invest in Two Crypto Firms
As per the report, DWS Group’s CEO Stefan Hoops plans to invest in Frankfurt-based crypto exchange-traded products provider Deutsche Digital Assets (DDA) and Bankhaus Scheich-owned digital asset trading firm Tradias.
Hoops is trying to mend DWS’s reputation after being sued by a German consumer group for greenwashing misrepresentations.
Greenwashing is a deceitful marketing strategy companies use to project themselves as environmentally friendly. Such companies spend more time and resources on marketing than on minimizing their environmental impact.
DWS Group Loses Over $100B in AUM
The allegations, coupled with last year’s bear market, caused a drop in DWS’ growth and investors’ trust as the management arm saw outflows of roughly €20 billion ($21.5 billion) and a €107 billion ($108.5 billion).
The potential investments in DDA and Tradias align with DWS’s strategy for blockchain and cryptocurrencies. During an earnings call with Bloomberg last week, Hoops affirmed that the asset manager had begun to assess strategic partners in the digital asset space and commenced due diligence on potential targets. He insisted that the recent decline in the industry could provide opportunities for DWS.
Notably, Hoops is a vocal advocate for novel technologies like digital currencies and recently created a plan for using them.
Traditional Firms Tap Into Crypto
Meanwhile, DWS Group is not the only traditional financial institution planning to explore the crypto industry. Entities such as Bank of New York Mellon Corp. (BNY Mellon) joined the crypto bandwagon years ago.
CryptoPotato reported in March 2022 that stablecoin issuer Circle tapped BNY Mellon as the primary custodian of its stablecoin USD Coin (USDC). The partnership helped bridge traditional financial services and the digital asset space.
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Deutsche Bank has announced the launch of its new digital asset investment strategy, making it one of the first major banks to invest in cryptocurrency companies. The bank, one of the world’s largest and most respected financial institutions, is partnering with two crypto projects – Fetch.ai and dYdX – in a drive to take advantage of the opportunities that are being created by the current bear market.
Deutsche Bank’s Head of Global Markets Strategy and Communications, Christiana Riley, stated that the decision to invest in the two companies was a result of the bank’s commitment to “proactively embrace the potential of blockchain technology and its potential applications in the financial sector.” The bank believes that, despite the current downturn in global markets, investment in the burgeoning industry of cryptocurrencies and associated technology can still yield positive returns.
The press release announcing the investment also revealed that, with the new strategy, Deutsche Bank is aiming to establish a “strategic and long-term relationship” with the two companies. It hopes to gain insight into new developments in the world of digital assets and offer these to its clients.
In addition, the release showed that the bank is looking to use investments in the two companies to feed their own research and development efforts. Fetch.ai focuses primarily on distributed ledger technology and machine learning, while dYdX concentrates on digital assets and permissionless finance. It is hoped that the technology developed by these companies can be used to develop innovative solutions.
In conclusion, Deutsche Bank’s decision to invest in two crypto companies is a significant step forward for the mainstream integration of digital assets and blockchain technology. It shows that a major player in finance is willing to take risks and capitalise on the opportunities that come with the bear market. With further strategic investments planned, it may be the start of a new chapter in the evolution of digital currencies.
