Deutsche Bank's Bitcoin custody service boosts share price and Bitcoin value

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Deutsche Bank (ETR:DBKGn) saw its share price surge by 10% to €11.3 (€1 = $1.0666) following the announcement of its Bitcoin custody service for institutional clients. The bank's entry into crypto custody services, in collaboration with Swiss-based cryptocurrency firm Taurus, also sparked a rise in Bitcoin's price to over $26,000.

The launch marks Deutsche Bank's first venture into such services. The bank will hold a limited number of cryptocurrencies, including Bitcoin, as well as tokenized versions of traditional financial assets for its clients. This initiative is a shift from Deutsche Bank's previously less optimistic stance towards crypto, reflecting the growth and resilience of the digital asset industry despite multiple collapses of top cryptocurrency firms in 2022.

In the wake of Deutsche Bank's move, other traditional financial firms are exploring how blockchain technology could be applied to the trading and settlement of traditional financial assets. Firms like BNY Mellon (NYSE:BK) and Societe Generale (OTC:SCGLY) now offer crypto custody services to institutional investors, while Zodia Custody, a subsidiary of Standard Chartered (OTC:SCBFF), has partnered with Polkadot to provide robust custody services for digital assets.

The launch of Deutsche Bank's crypto custody service coincided with a resurgence in Bitcoin's price, reaching above $26,000 and marking a new high for the month. Samer Hasn, market analyst at Australia-based global multi-asset broker XS.com, noted that this rise "coincides with a noticeable return in investor sentiment."

The broader crypto market has been on a recovery path over the past week. Last Monday (September 11), the overall crypto market cap stood at $1.03 trillion. A week later, it rose to $1.06 trillion. Over the past seven days, Bitcoin achieved a high of $26,813.97 (on Thursday) and a low of $25,007.16 (on Sunday). Ethereum, meanwhile, saw a high of $1,650.72 (on Thursday) and a low of $1,541.73 (on Sunday).

Deutsche Bank's partnership with Taurus marks a significant step in the bank's efforts to offer crypto custody and trading services to its clients, following its application for a digital asset custody license from the Federal Financial Supervisory Authority (BaFin), Germany's financial regulatory body, in June 2023.

However, the crypto market has faced challenges. Trading activity on Binance.US hit unprecedented lows in September, reflecting significant issues faced by the crypto exchange. Legal troubles emerged in June when the Securities and Exchange Commission (SEC) filed a lawsuit against both Binance and Binance.US over unregistered securities offerings, wash trading, and other violations.

Despite these challenges, interest in Bitcoin among traditional asset management firms continues to grow. BlackRock (NYSE:BLK), Fidelity, and WisdomTree are currently awaiting a decision from the SEC over their applications for a spot Bitcoin Exchange Traded Fund (ETF) product.

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