Deutsche Bank Explores Public Blockchains for TradFi Applications

Deutsche Bank is addressing regulatory risks that traditional financial institutions face when utilizing public blockchain networks.

Deutsche Bank AG, Germany’s largest financial conglomerate, is investigating ways to integrate public blockchains while managing potential regulatory challenges. The company aims to eliminate risks such as inadvertent transactions with sanctioned entities or parties involved in illicit activities, according to Bloomberg.

Bloomberg reports that in early November, Deutsche Bank launched Project Dama 2, a pilot initiative focused on tokenized assets. The platform, built on the ZKsync technology, is supported by technical partners Memento Blockchain and Interop Labs.

According to Boon-Hiong Chan, Deutsche Bank’s Lead of Applied Innovation, Project Dama 2 leverages a Layer 2 solution based on the Ethereum blockchain. The use of L2 protocols mitigates risks associated with unforeseen hard forks on the mainnet, ensures control over validator lists to avoid undesirable counterparties, and offers regulators sufficient oversight of fund movements.

This approach aims to enable TradFi organizations to harness the advantages of Web3 technologies in the financial sector while minimizing associated risks. As reported by Bloomberg, Deutsche Bank plans to launch a minimum viable product (MVP) for Project Dama 2 in 2025.

Deutsche Bank’s research is part of Project Guardian, an initiative led by the Monetary Authority of Singapore (MAS). The bank joined the initiative in May 2024 to explore public blockchain networks for servicing tokenized and digital funds in regulated financial markets.