Deutsche Börse Group has launched Deutsche Börse Digital Exchange (DBDX), a crypto spot platform for institutional clients. Initially, the leading cryptocurrencies Bitcoin and Ether will be traded on it, with other cryptocurrencies to follow. DBDX offers a fully regulated and secure ecosystem for trading, settlement, and custody of crypto-assets and uses the existing connection of market participants. Technically, the connection is made via the T7 trading system, which is also used by Eurex and Xetra, explains the German stock exchange. This means that investors who are already connected there do not need a new connection.

With the new offering, Deutsche Börse wants to close a gap in the market and at the same time move into the center of the growing institutional market for digital assets. The exchange's new offering comes relatively late. Boerse Stuttgart Digital has been offering cryptocurrency trading for private and institutional investors since 2019. On Tuesday, Boerse Stuttgart Digital announced a partnership with Profidata, a provider of software solutions for investment and asset management, at virtually the same time as Deutsche Börse. This will provide institutional clients with simple, seamless, and fully regulated access to cryptocurrency trading and custody via Boerse Stuttgart Digital's infrastructure.

Institutional investors in Frankfurt expressly welcomed Deutsche Börse's new offering talking to Börsen-Zeitung. It is important that there is now a regulated market for cryptocurrencies that enables investments. „We very much welcome the new offering from an innovation perspective for Germany as a financial centre,“ says Christoph Hock, Head of Tokenization and Digital Assets at Union Investment.

„Deutsche Börse's offering is primarily aimed at purely institutional trading participants – without any connection to end customers,“ explains Matthias Voelkel, CEO of Börse Stuttgart Group. „As a pioneer, we welcome the competition with our regulated trading venue Boerse Stuttgart Digital Exchange, which has been established since 2019. We continue to be the only exchange group in Europe with a focus on the institutional crypto business and on end customers. We offer fully regulated and secure infrastructure solutions for trading and custody to banks and brokers who want to give their clients access to cryptocurrencies. One example is our cooperation with DZ Bank and the cooperative financial group.“

The background to the growing interest in cryptocurrencies is not least their enormous increase in value in recent months. The crypto winter is over, and the high inflows in recent weeks and months show that demand for crypto is growing, especially among institutional investors. On Tuesday, Bitcoin reached a new all-time high of more than 69,000 dollars. Bitcoin's market capitalization now stands at 1.3 trillion dollars and Ether's at 0.45 trillion dollars. A number of analysts are forecasting further growth in the value of cryptocurrencies.

The approval of spot ETFs on Bitcoin in the US at the beginning of January has raised hopes among crypto enthusiasts for wider institutional adoption of digital assets. Deutsche Bank described the approval by the SEC as a „significant milestone“. This is because institutional investors are familiar with exchange-traded index funds. Passive investment via such vehicles is much less complicated for them and easier to reconcile with their regulations than active digital assets investments. ETFs from leading names such as Blackrock generally meet high standards in terms of collateralization and custody of the underlying assets, argue asset managers such as Wisdom Tree. In Europe, it is not possible to launch ETFs on individual assets and therefore also on cryptocurrencies under the Ucits regulations.

However, the first centrally cleared exchange-traded product (ETP) with Bitcoin as the baseline value was launched on Xetra back in June 2020 – at times, more than 90 such vehicles on individual cryptocurrencies and digital asset baskets were listed on Deutsche Börse's trading system, although this figure has since fallen to around 80.

In the first step, trading on DBDX will take place via a request for quote (RFQ) functionality; later, multilateral trading will also be possible, Deutsche Börse announced. While they will operate the trading venue, Crypto Finance (Germany) GmbH will handle the settlement and custody of trades. Crypto Finance is a wholly owned subsidiary of Deutsche Börse.

DBDX also supports the necessary further development of the market for digital assets into a trustworthy ecosystem that meets institutional standards. In addition, the market entry represents an important milestone as it strengthens Deutsche Börse Group's presence in this area and underlines its ability to offer innovative financial solutions to clients in Germany and other European markets.

„Our new offering is a game changer for digital ecosystems,“ comments Carlo Kölzer, Head of FX & Digital Assets at Deutsche Börse. „We want to offer institutional clients in Europe trustworthy markets for crypto assets that are characterized by transparency and security and in which the processes comply with regulatory requirements. This strengthens the integrity and security of the entire market.“

At the end of 2023, Deutsche Börse Group confirmed its goal of establishing a regulated platform for digital assets as part of its „Horizon 2026“ strategy. In February, BaFin granted Crypto Finance (Germany) GmbH four licenses, which include regulated trading in digital assets as well as settlement and custody services.

These licenses were among the prerequisites for the launch of the platform, which had already received a license as a Multilateral Trading Facility (MTF).