W Power 2024

New regulations get European banks interested in crypto services

European institution's interest in crypto services may also be influenced by the approval of spot Bitcoin ETFs in the US

Shashank Bhardwaj
Published: Apr 24, 2024 02:41:44 PM IST
Updated: Apr 24, 2024 02:41:51 PM IST

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The largest European banks are now considering entering the crypto industry based on the clarity provided by the bloc's adoption of the Markets in Crypto-Assets Regulation (MiCA).

The MiCA Regulation is a legislative measure introduced by the EU to establish the inaugural comprehensive global regulatory framework for crypto assets. Initially suggested by the European Commission in September 2020, MiCA was eventually adopted by European legislators in 2023. This framework aims to protect investors by making transparency requirements stricter and implementing Anti-Money Laundering (AML) protocols.

Following MiCA's approval, European banks are more willing to create crypto services despite requiring further technical knowledge and infrastructure. As a result, they are seeking partnerships with acquainted organisations to navigate the crypto terrain effectively.

For Instance, Germany’s largest federal bank, Landesbank Baden-Württemberg (LBBW), boasting over $355 billion in assets under management, has opted to provide cryptocurrency custodial services in collaboration with the Bitpanda exchange. Under the agreement, LBBW and Bitpanda will extend crypto custody services to corporate and institutional clients, commencing in the second half of 2024.

Also, Bitpanda collaborated with Raiffeisen, Austria’s largest community banking group, to provide cryptocurrency services to its retail customers. The partnership, announced last year, aimed to help users build a secure financial future through various offerings, such as commodities, stocks, exchange-traded funds (ETFs), and precious metals.

The approval of spot Bitcoin ETFs in the US may also influence European institutions' interest in crypto services. Following the SEC's (The Securities and Exchange Commission) approval in January, the market has seen significant inflows, prompting similar efforts in other jurisdictions.

Leading the market are BlackRock’s IBIT, Fidelity’s FBTC, and Grayscale’s GBTC. The 10 Bitcoin spot ETFs based in the US altogether have 837,330 BTC under their custody, representing 3.987 percent of the total Bitcoin supply. GBTC leads with 304,970 BTC in assets under management.

Last week, Hong Kong's Securities and Futures Commission (SFC) approved spot BTC ETFs, positioning the country ahead of the US in this aspect. Moreover, Hong Kong also approved Ethereum (ETH) spot ETFs. The two approved companies are the Hong Kong branches of China Asset Management and Harvest Global Investments.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Twitter: @bhardwajshash