Deutsche Bank is deciding whether to issue its stablecoin or support a wider project among many banks, showing a push to expand in the digital assets area as it improves its payment services.
Sabih Behzad, in charge of digital assets and currency transformation at Deutsche Bank, has announced that Europe’s biggest bank is actively working with blockchain technology. When talking to Bloomberg, Behzad says the institution is looking into issuing a stablecoin on its own or forming a partnership with other companies.
The bank is experimenting with producing digital tokens for client deposits that would guarantee speedy transaction and settlement procedures.
Stablecoins Gain Momentum as Payment Alternatives
Due to being connected to fiat currencies, stablecoins are recognized as reliable and interesting new ways to pay. As well as tokenized deposits, they are now common among mainstream banks looking for easier and less costly means of payment processing. Even though these technologies have been researched and tested over several years, they have not been adopted for widespread business use.
It is obvious that the market for stablecoins is growing while trust among regulators increases, especially in the US, Behzad noted.
“Banks can take many steps, for example, keeping reserves or launching their own stablecoins, whether solo or as a group.”
People are becoming more open to adoption because regulations are now explained clearly. While the EU has made a set of rules for digital assets, the US is working on passing rules for stablecoins. Because of these latest developments, many banks feel more secure in joining the digital currency industry.
The bank’s actions are affected by other organizations around it. The bank, through its digital arm, is planning to increase its cryptocurrency services by trying to launch a stablecoin. In another action in support of the bank’s digital effort, DWS Group, an asset management group from Deutsche Bank, joined forces with Flow Traders and Galaxy Digital to create a joint venture for making a euro-based token.
“I do see a role for a European stablecoin, or European banks working on a stablecoin, especially for settlement purposes in a digital world,” ING CEO Steven van Rijswijk said this week.
JPMorgan’s Kinexys network, which is built on blockchain technology, is handling more than $2 billion in daily transactions. Still, the $10 billion is just a tiny part of the bank’s $10 trillion daily payment transactions, showing that blockchain is still young but gaining popularity in traditional finance.
The bank has taken another step by looking into digital assets besides stablecoins. In this year, the bank put money into Partior, a technology that helps with cross-border payments. In the same year, it teamed up with Taurus, a blockchain company from Switzerland, to give institutions digital asset custody services.
Also, Deutsche Bank is contributing to Project Agorá, a key project launched by the BIS in company with various central banks. It aims to find out how tokenization can transform payments made between banks operating in different countries.
Forecasts by the market support the bank’s efforts to prepare for the future. Citigroup expects the stablecoin market to significantly grow, as it anticipates that the market’s total worth could increase from today’s $240 billion to more than $2 trillion by 2030. The report author predicts this fast growth will be led by advancements in laws and more support from private firms as well as government bodies.
