Deutsche Bank’s Asset Management Arm Eyes Crypto Investments

by Arthur · February 9, 2023

(Bloomberg) — Deutsche Bank AG’s asset management arm is in talks to invest in two German cryptocurrency firms as part of efforts to revive growth, according to people familiar with the matter.

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DWS Group, led by CEO Stefan Hoops, has held talks to buy a minority stake in Deutsche Digital Assets, a Frankfurt-based provider of crypto exchange-traded products, the people said, declining to be named to discuss private information. Another potential target is Tradias, the market-making firm owned by Bankhaus Scheich, they said.

The asset manager has also held talks about potential ways to partner with Galaxy Digital, the firm run by Mike Novogratz, the people said.

Hoops, which is trying to restore DWS’s reputation after allegations of greenwashing resulted in investigations by US and German authorities, would wade into a sector marked by a series of recent governance scandals – including the collapse of crypto exchange FTX in November. Hoops has been a vocal advocate of new technologies and in December outlined a strategy around the use of blockchain and digital currencies.

DWS is not the only firm with roots in traditional finance to consider expanding into digital assets. Companies from the Bank of New York Mellon Corp. to BlackRock Inc. is experimenting with crypto, betting that the industry will provide lucrative opportunities as it matures.

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Tradias, which counts German brokerage Trade Republic among its clients, was tapped by Frankfurt prosecutors in late 2021 to sell confiscated cryptocurrency in a way that created minimal volatility. As with DDA, discussions about investing in Tradias are about buying a minority stake, the people said.

Representatives for DWS, Tradias and Galaxy declined to comment. The DDA had no immediate comment.

Reviving growth and investor confidence is one of the main tasks for DWS, which reported outflows of almost 20 billion euros ($21.5 billion) for 2022 and a 107 billion euro drop in assets under management, as markets sank worldwide.

Hoops said on an earnings call last week that DWS has “begun to evaluate strategic partners and begin due diligence on potential targets” in areas where it wants to develop new capabilities, such as digital assets. He said the recent drop in digital asset prices could present “interesting opportunities” for DWS.

–With assistance from Stephan Kahl.

(Adds Galaxy talks in third paragraph.)