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Asset Managers at Deutsch Bank Contemplating Investment in Crypto Companies

Image Source: DB (1.1)

According to a report (1) that Bloomberg published, the asset management division of Deutsche Bank AG is considering making investments in two crypto companies based in Germany as part of its growth strategy. The report cites individuals familiar with the situation as its source.

Recently, discussions over acquiring a minority share in Deutsche Digital Assets, a company that develops crypto exchange-traded products, were held between Stefan Hoops, the Chief Executive Officer of DWS Group, and Deutsche Digital Assets.

According to the sources, another potential candidate is the market-making company Tradis, controlled by Bankhaus Scheich.

Furthermore, according to the sources, Deutsche Bank conducted prospective talks of partnering with Galaxy Digital, a company owned by crypto millionaire Mike Novogratz.

With this most recent turn of events, it would appear that Hoops is making an effort to repair the damage done to the brand of the DWS Group, which was recently the subject of claims of greenwashing and a subsequent investigation by authorities in both the United States and Germany.

Nevertheless, these courageous steps are being taken at a time when several governance crises have plagued the whole crypto currency industry.

Hoops has, for a very long time, been an advocate for emerging technology. Hoops have only just, in December 2022, decided to use blockchain technology and digital currency.

Traditional Financial Systems and Crypto

The DWS Group is not the only company that has its origins in more conventional forms of financing but is now attempting to make inroads into the thriving cryptocurrency market.

The world's largest financial institutions, including Blackrock Inc. and Bank of New York Mellon, have started placing bets on crypto currencies, expecting that the crypto currency market would present good possibilities as the business develops.

Tradias, a company that also counts the German trading business Trade Republic as one of its clients, was in communication with Frankfurt prosecutors before the end of 2021 regarding the sale of seized digital assets in a manner that would generate the least amount of volatility possible.

According to the individual acquainted with the situation, Deutsche Bank is considering purchasing a minority position in Tradias.

Restoring growth and regaining investors' trust will be one of the most difficult difficulties that the DWS Group will face.

Following the severe market meltdown a year ago, the company recorded net outflows of €20 billion ($21.5 billion) and a decrease in managed assets totaling €107 billion.

The other week, during an earnings report, Hoops asserted that DWS has "begun to evaluate key players and commence thorough research on possible targets" in sectors where it wants to create new features, such as digital assets.  

He mentioned that the current decline in the pricing of digital assets might result in "interesting possibilities."

About Deutsche Bank

Deutsche Bank is a global bank comprised of four key divisions: the Investment Bank, the Corporate Bank, the Private Bank, and the Asset Management division (DWS). It can typically command a large amount of transaction flow through its investment banking activities.

The New Yorker reports that Deutsche Bank has long had a reputation among large banks as having an "abject" reputation because it has been associated with major scandals across a variety of various issue areas.