Deutsche Bank AG is tackling regulatory hurdles faced by banks when utilizing public blockchains, such as the risk of unintentionally engaging with criminals or sanctioned entities.
As reported by Bloomberg, the bank rolled out the beta version of Project Dama 2, an asset servicing pilot, in November. This platform’s layer two system leverages public blockchains to facilitate more cost-effective and streamlined transactions.
Boon-Hiong Chan, an innovation lead at Deutsche Bank Asia-Pacific, highlighted that the bank’s Layer 2 is connected to Ethereum, a bustling blockchain network.
Deutsche Bank views blockchain as a solution to address margin pressures in the financial sector
Chan elaborated on the risks that public blockchains like Ethereum pose to regulated banks. These risks encompass uncertainties surrounding transaction validation, potential payments to sanctioned entities, and unforeseen alterations to the blockchain.
Chan further stated, “By utilizing two chains, a number of these regulatory concerns can be addressed.”
Project Dama 2 is part of Singapore’s Project Guardian, an initiative where 24 prominent financial institutions are exploring asset tokenization through blockchain. Deutsche Bank, alongside other proponents, regards blockchain as a strategy to tackle margin pressures in financial services. However, there remains speculation on the extent to which banks should delve into the realm of cryptocurrencies.