Savings banks (Sparkasse) in Germany are developing an encryption project that will allow their customers to trade cryptocurrencies directly through their checking accounts.
Cryptocurrency trading without KYC
The German Association of Savings Banks, which includes more than 400 savings banks across the country, proposes a digital wallet option directly accessible through savings accounts. IT service provider S-Payment is preparing the concept to be presented to committees in early 2022. If approved, the project will allow the bank’s customers to directly purchase cryptocurrencies such as BTC and ETH. This means that customers would not have to go through lengthy and tedious KYC processes to join an encryption trading exchange. Instead, they can conduct their cryptographic activities directly through their Sparkasse checking accounts. Furthermore, Sparkasse’s legitimacy coupled with a volatile asset class such as cryptocurrency would attract financially conservative German clients.
Banks eager to launch encrypted wallet
If the committees approve the pilot, a bank-sponsored digital wallet can be launched by the end of next year. Individual savings banks would be responsible for initiating all related pilot projects. Even if the project is collectively given the green light, each of the 370 savings banks will be able to make the final decision whether to offer encryption services to customers or not. However, most banks are already very interested in the project.
With around 50 million customers, savings banks are market leaders among German financial institutions. When the digital wallet is launched, this entire customer base will be eligible to trade cryptocurrencies and this will bring a new economic dawn to the European banking scene as a whole. Many newer financial institutions and organizations, such as PayPal, have started offering encryption services to customers around the world. However, this will be the first time for a traditional financial institution of this size to venture into the world of cryptocurrencies.
Encryption as protection against inflation
The launch of the cryptographic services pilot program can be interpreted as Germany trying to provide protection to its citizens against rising global inflation. The president of the German Association of Savings Banks, Helmut Schleweis, pointed to the erosion of wealth that occurs due to the “toxic combination” of high prices and low interest rates on investments. With cryptocurrencies like the BTC slowly emerging as a solid hedge against inflation, the pilot project could witness major economic turmoil for Germany in 2022.