A bitcoin image set against the German flag. [123rf]
A bitcoin image set against the German flag. [123rf]

German regional banks that once shied away from cryptocurrency trading services, citing digital asset volatility, are now entering the market one after another. As customer demand has grown, they have opened the door for clients to buy and sell digital assets through the banks they already use.

German cooperative banks and savings banks are rolling out digital asset trading services for retail customers, Bloomberg reported Friday (local time). Together, the two banking groups serve tens of millions of customers, and analysts expect the move to significantly broaden the base of Germany's digital asset market.

Some of the roughly 650 cooperative banks in Germany are already offering customers a digital asset trading platform developed by major bank DZ Bank. The platform supports trading in bitcoin, ether, litecoin and cardano.

On top of that, DekaBank is developing a digital asset trading product for about 340 savings banks. The bank plans to launch the service by the end of this year and expand it in stages, with individual regional banks free to decide whether to adopt it.

Early market interest in the trading service has been strong. Markus Berenföng, DZ Bank's head of product solutions and banking sales, said he expects "a three-digit number of banks to offer the product going forward."

The shift marks a sharp contrast with just four years ago, when savings banks refused to offer retail trading platforms for digital assets, citing their high volatility. At the time, the banks judged that digital asset investment carried "unpredictable risks."

Germany's traditionally conservative financial culture has also long been seen as an obstacle to the expansion of the digital asset market. The country operates a so-called "debt brake" that limits large government fiscal deficits, reflecting a deeply ingrained fiscal conservatism. Until the COVID-19 pandemic, some regions still showed a reluctance to use credit cards.

But as demand for digital asset investment has grown, local banks have been changing their stance. A survey by digital asset infrastructure firm Börse Stuttgart Digital found that about 25 percent of German respondents said they had invested in digital assets — higher than Italy at 24 percent and France at 23 percent.

Also notable is the finding that German consumers trust their primary banks more than dedicated digital asset trading platforms, a factor further encouraging banks to enter the market. In the same survey, about 38 percent of respondents said they trusted their primary bank, roughly double the 19 percent who said they trusted specialized digital asset trading platforms.

VR Bank Würzburg, which was an early mover in offering digital asset trading services, now counts hundreds of customers using the product. Klaus Leder, a board member at VR Bank Würzburg, said "customers can now trade in a familiar environment," adding that he expects digital assets to "establish themselves as a mainstream asset class alongside shares, bonds and private market investments."

Some analysts argue that banks are introducing the services less as a new revenue stream and more as a way to retain existing customers and attract younger ones. Ralf Kölbach, chairman of the board at Westerwald Bank, which recently launched a digital asset trading service, said that if regional banks do not offer cryptocurrency trading, they risk "losing their presence in certain market segments, such as younger or tech-savvy customers."

Academics have raised concerns about the expansion of digital asset trading by regional banks, warning that existing bank customers may enter the market without fully understanding the potential for losses. Georg Kopier, a professor at the Frankfurt School of Finance and Management, said it is "worrying that savings banks and cooperative banks are opening the floodgates to the digital asset market," adding that "their traditional customers may not sufficiently understand the risks of digital assets."


kyoung@heraldcorp.com