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Deutsche Bank Joins JP Morgan’s Blockchain Platform

This article is contributed by our content partner, Nexchange Group.

Germany’s beleaguered banking giant, Deutsche Bank, has joined JP Morgan’s blockchain-based Interbank Information Network (IIN), the Coin Telegraph reports.

Deutsche Bank’s entry brings the initiative’s network to 320 banks, with Takis Georgakopoulos, head of payments at JP Morgan, expressing hope that Deutsche will be the first of several other large banks to join the platform.

Deutsche Bank, the world’s largest clearer of euro-denominated payments, expects IIN to slash the cost of processing difficult payments, said the bank’s Head of Cash Management, Ole Matthiessen. IIN, Matthiessen added, should also help Deutsche raise the quality of its client services.

JP Morgan launched IIN back in 2017 with two partners, the Royal Bank of Canada and Australia and New Zealand Banking Group. The aim was – and is – to use blockchain to reduce friction in the global payments process, allowing payments to reach beneficiaries faster and with better security. Large banks such as Société Générale, Sumitomo Mitsui, and China CITIC Bank have joined since then, and according to Georgakopoulos, JPMorgan is expecting to announce agreements with other large banks in the future.

The firm, he says, aims to reach 400 agreements with banks by the end of the year.

Deutsche Bank Ignored Suspicious Activity of Child Sex Trafficker Jeffrey Epstein, Bitcoin Community Screams Hypocrisy

As the NY State Department of Financial Services has slapped Deutsche Bank with a $150 million dollar fine, Bitcoin Community has been quick to call out the institutional bank’s shortcomings in funding the international child sex trafficker Jeffrey Epstein.

Epstein Child Sex Scandal

Jeffrey Epstein, the recently deceased American socialite and sex offender, was apprehended back in 2019 for prostitution and sex trafficking charges. Convicted of prostitution trade and for sexually assaulting girls as young as 14 years old, Epstein appears to have laundered his money through financial institutions such as Deutsche Bank.

Deutsche Bank and Jeffrey Epstein – Partners?

CNBC reported, the financial banking institution is being fined $150M dollars for their “significant compliance failures,” and for conducting business with Epstein, though they were well aware of his previous indictments. According to the Financial Services Department of New York, the bank had processed hundreds of million-dollar transactions that were questionable, and that should have prompted the German central bank to investigate further into Epstein’s history.

The transactions that were processed by the bank included payments to Epstein’s business partners, who were alleged to have been co-conspirators in Epstein’s child sex trafficking ring. Settlements and payouts to legal firms totaling approximately $13M dollars were uncovered. Cash withdrawals amounting to more than $800, 000 over a span of 4 years also came to light, and the Financial Services Department of NY were quick to call out Deutsche Bank’s failure in addressing and flagging these suspicious financial activities.

Bitcoin Community Blasts Deutsche Bank

The Bitcoin Community was quick to point out Deutsche Bank’s lack of judgment. They indicated on social media platforms such as Reddit that financial bankers on Wall Street are generally quick to dismiss Bitcoin as simply a facilitator of payments for terrorism activities, illicit criminal behavior, and drug trades, but that “douche bank” — Deutsche Bank — just settled for a $150 million dollar fine for helping Epstein finance child sex slaves.

Bitcoin advocates stipulate that there is a lot of money laundering ongoing with traditional financial services. According to Chainalysis, more than $1 trillion cryptocurrency transactions took place in 2019, but only 1.1% of them were found to be illicit.

Deutsche Bank Executive Says CBDC is More of a Political Decision

Deutsche Bundesbank Executive in charge of payments, Burkhard Balz has weighed in on the surging strides of the European Central Bank to debut a Central Bank Digital Currency and reasoned that such decisions as it relates to individual countries around the world may be more of a political one than a technical one.

Speaking at a virtual conference of the China Europe Finance Summit – A Hybrid Conference on Sino-European Capital Markets, Balz noted that the CBDC pursuit is political and the overall impact of such a venture on the society must be considered.

The Deutsche Bank Executive said:

“Introducing CBDC is a political decision rather than a technical decision. Therefore, a comprehensive conceptual analysis and assessment of CBDC relative to alternative options is necessary – especially in terms of the fulfillment of our mandate, but also regarding its impact on society as a whole.”

Balz gave a series of assessments and action points every country must perfect before making a CBDC available and reiterated that in the case of the E.U and Germany, the European Central Bank (ECB) may implement a cap on the total number of Digital Euro anyone can hold in order to prevent a Digital Bank Run in which users may convert cash into the equivalent digital currency which may offset the entire financial system.

Balz also advocated the debut of Stablecoins due to their potentials as the ECB is championing.

Digital Euro Drive

The European Central Bank has been more upbeat about its intentions to debut a unifying digital currency for members in the Eurozone. President of the ECB Christine Lagarde broached the topic of CBDC issuance recently and reiterated why the bank is seriously considering the creation of a digital euro which is to meet the growing demand for digital payments across the bloc.

The Digital Euro drive has sparked increased preparation from the regional banks within the region including the Italian Banking Association, Associazione Bancaria Italiana (ABI) and the ECB has recently begun a public consultation as part of the process of developing of the digital euro.

Deutsche Bank says Bitcoin Is too Important to Ignore

German multinational investment bank and financial services company Deutsche Bank has issued a new report, stating categorically that Bitcoin’s $1 trillion market capitalization has made the cryptocurrency too important to ignore.

The report detailed that big players who buy and sell Bitcoins have considerable market-moving power and as long as asset managers and companies continue to enter the market, Bitcoin prices could continue to rise.

The price of one Bitcoin has grown from less than a dollar back in 2009 when it was launched, to about $58,328 at the time of writing according to CoinMarketCap. The growth of the world’s first cryptocurrency has attracted major institutional investors such as electric automaker giant Tesla Inc., payment services firm Square Inc and business intelligence firm MicroStrategy Incorporated to mention a few, further pushing the emerging asset class into the mainstream.

Per the Deutsche Bank’s report, Bitcoin transactions and traceability are still limited, with the real debate bordering on whether rising valuations alone can be reason enough for bitcoin to evolve into an asset class, or whether its illiquidity is an obstacle. The bank accounted that barely 30% of Bitcoin’s transactional activities are related to payments transactions while the rest is being used as an investment asset.

Bitcoin and the Tinkerbell Effect

Deutsche Bank described Bitcoin using “The Tinkerbell Effect,” noting that the value of the digital currency will continue to rise depending on what people believe it is worth. This way, people, especially new entrants into the crypto space may focus more on the hype that surrounds the cryptocurrency, and not necessarily on its value.

Many in crypto today are investing in Bitcoin because of the belief that the digital asset is going to make one rich over time. The Deutsche Bank report did not rule this out. However, it noted that the volatility in the market is likely to persist as a few additional large purchases or market exits could significantly impact the supply-demand equilibrium.

"Deutsche Bank share slide fuels global banking fears"

The recent decline in Deutsche Bank’s share price has reignited concerns about the state of the global banking system and the possibility of a new financial crisis. As we have seen in the past, major commercial banks are deemed too big to fail, and governments will often bail them out to prevent widespread economic collapse. However, the mounting debt levels of the U.S. government and other countries are raising concerns that this time, the situation may be different.

While politicians may kick the can down the road when it comes to addressing unsustainable debt levels, the market is starting to feel the effects of this issue. The yo-yoing between interest rate hikes and quantitative easing programs by central banks is not designed to solve the systemic issue of government expenditure exceeding income. Instead, the Federal Reserve and U.S. Treasury are working to protect the dollar’s position as the global world reserve currency. This short-term solution may have long-term consequences, including the threat of hyperinflation.

As a result of these economic concerns, some investors are turning to alternative investments such as Bitcoin. The cryptocurrency has often been touted as a potential hedge against inflation due to its limited supply and decentralized nature. Despite criticism from some commentators, the recent rise in Bitcoin’s price suggests that the inflation hedge thesis may be back in play.

However, the relationship between Bitcoin and inflation is complex and difficult to predict. In 2021 and early 2022, inflation was on the rise, and Bitcoin’s price fell, leading many to dismiss the idea that Bitcoin could be an inflation hedge. But some members of the Bitcoin community, such as Steven Lubka, continued to hold this conviction. They argued that the inflation was due to systemic supply chain shocks caused by the pandemic and not monetary inflation. Therefore, the idea that Bitcoin could act as a lifeboat amid the devaluing of the U.S. dollar could still hold true.

Bitcoin’s price decline in the past was also partly due to the unwinding of fraud and leverage from certain players in the cryptocurrency market. As the market continues to mature, the value of Bitcoin as a hard money asset may become more apparent to investors.

In conclusion, the recent decline in Deutsche Bank’s share price highlights the fragility of the global banking system and the potential for a new financial crisis. While politicians and central banks may try to kick the can down the road, the mounting debt levels of governments and the threat of hyperinflation suggest that a historic economic correction may be looming. Some investors are turning to Bitcoin as a potential hedge against these risks, but the relationship between the cryptocurrency and inflation remains complex and difficult to predict.

Deutsche Bank Survey Predicts Bitcoin Could Plunge Below $20K

The recent Deutsche Bank survey, conducted between January 15-19, 2024, involving 2,000 respondents from the US, UK, and Eurozone, has revealed a rather pessimistic outlook for Bitcoin’s price. The findings indicate that over one-third of the respondents believe that Bitcoin’s value could drop below $20,000 by the end of 2024. In contrast, around 15% of the surveyed individuals maintain a more optimistic view, anticipating that Bitcoin’s price could stabilize between $40,000 and $75,000 by year-end.

This bearish sentiment among retail investors is influenced by several factors, including the recent performance of Bitcoin and the broader cryptocurrency market. After reaching a peak of around $49,000 on January 11, 2024, attributed to the excitement surrounding the launch of spot Bitcoin Exchange-Traded Funds (ETFs) in the U.S., Bitcoin’s price subsequently experienced a significant decline, falling to around $39,791. The report by Deutsche Bank analysts suggests that the introduction of new spot Bitcoin ETFs might further institutionalize Bitcoin, yet the majority of ETF flows have originated from retail investors.

Moreover, the survey highlights broader concerns about the stability of the cryptocurrency market. More than half of those surveyed expressed fears of a major cryptocurrency collapse in the next two years, likely fueled by incidents like the fall of the crypto exchange FTX in 2022 and the collapse of the stablecoin terraUSD (UST), coupled with ongoing regulatory crackdowns in the U.S.

In the context of Bitcoin ETFs, the market has seen record outflows, particularly affecting Grayscale Investments’ Bitcoin Trust ETF, despite overall positive trends since their inception. Industry experts and companies, including Tesla, remain bullish on BTC’s long-term outlook, expecting substantial capital inflows into ETFs.

These findings and market behaviors reflect a cautious or skeptical approach towards the future of cryptocurrencies like Bitcoin, amid regulatory uncertainties and past market issues. The survey also underlines a significant gap in the understanding of cryptocurrency, with two-thirds of consumers admitting to having little or no knowledge of digital assets, which could be contributing to the cautious sentiment.

In summary, while the short-term outlook for Bitcoin appears bearish according to the survey, the long-term perspective, as suggested by industry experts and certain corporate players, remains more optimistic