Volksbank Mittweida is the first bank to join the German Blockchain Association. The bank is also a member of INATBA and was the first bank in Germany to offer a corporate account to ICO clients.
Although some of the larger banks are slowly starting to discover blockchain banking, the niche is still dominated by smaller banks. Blockchain clients are not worth the regulatory risk and the administrative hassle for most banks. Smaller banks, however, are willing to take a bet and consider blockchain as a chance to service an untouched market that is not yet penetrated by their larger competitors.
One of those banks isVolksbank Mittweida. As the name suggests, the bank is located in Mittweida, a town in the Free State of Saxony, Germany, 18 km north of Chemnitz, and 54 km west of Dresden.
The Federal Ministry of Education attempts to market the region as hub for blockchain developments. Besides Volksbank Mittweida, the local university, and the public administration are part of the agenda as well. The ministry suggests there will be pilot projects for public blockchain applications in the region launching in the next years.
First German bank to service ICO clients
It’s not the first time the bank makes headlines due to its blockchain efforts. In November 2018, Volksbank Mittweida was reportedly the first bank in Germany that offered a corporate account to businesses conducting an ICO.
Thomas Otto from Volksbank Mittweida says, „It’s absurd that businesses with new ideas and technologies fail because they can’t open a bank account, even though they comply with all regulations, compliance standards, and KYC/ AML rules.”
Although an ICO client comes with increased documentation requirements, the bank didn’t shy away from offering its services. During the due diligence, the bank does not consider the ICO’s chances of success, but whether the company complies with all rules and regulations. If it does, it can open an account.
The bank checks whether an ICO issuer can provide KYC and AML data for each digital wallet address. Additionally, ICOs need to prove that investors from blacklisted countries are excluded.
Florian Uhl from Volksbank Mittweida says, “We don’t make the rules for our clients, we only check how they fulfill their regulatory responsibilities. Even though we ask many questions, and we do have a minimum standard, we provide a service; we don’t provide any legal advice.”
Several businesses that have conducted an ICO have accounts with Volksbank Mittweida, for example Iconiq Lab and Unibright.
First bank to join the German Blockchain Association
According to a recent announcement, Volksbank Mittweida is the first bank to join the German Blockchain Association “Bundesblock.” The association has 80 members, including names like Deutsche Telekom, the Frankfurt School of Finance, and cryptocurrency IOTA.
According to its website, Bundesblock runs working groups in areas such as cybersecurity, taxation, healthcare, administration, insurance, and sharing economy. Thomas Otto comments that the „legal and social recognition of blockchain technology will boost the attractiveness of Germany’s economy.”
In April 2019 Volksbank Mittweida also became a founding member of the International Association for Trusted Blockchain Applications (INATBA). As such, the small bank in Saxony appeared next to renowned international players such as SAP, SWIFT, and others.
In a way, Volksbank Mittweida is for Germany what Bank Frick is for Liechtenstein: A banking pioneer that has discovered blockchain as a unique way to position itself as a frontrunner. Well done.