Bank of Italy leverage Polygon to help institutions experiment with DeFi

Key takeaways

• The Bank of Italy will use the Polygon blockchain to help institutions experiment with DeFi and asset tokenisation.

• The Bank will also use crypto custodian Fireblocks. 

The Bank of Italy to help institutions experiment with DeFi

The Bank of Italy’s innovation hub has partnered with Polygon Labs and crypto custodian Fireblocks to help financial institutions experiment with decentralised finance (DeFi) and asset tokenisation. 

The apex bank’s Milano Hub will support the development of EeFi for Security Token ecosystem over the next six months. 

The platform is designed to make it easier for traditional financial institutions to experiment with asset tokenisation while also executing transactions using DeFi in a regulated manner. 

This latest cryptocurrency news comes as the Italian central bank joins other apex banks globally to work on CBDCs (central bank digital currencies). The bank is also working on various ways to integrate blockchain technology into the existing financial system. 

According to the Bank of Italy, Cetif Advisory, a consultancy spinoff of the Università Cattolica del Sacro Cuore of Milan’s Cetif Research Centre, will be in charge of the platform’s development. 

Polygon Labs, Fireblocks, tech developer Reply, legal and tax consultant Linklaters and web3 studio DVRS will help Cetif Advisory in developing the platform. 

While commenting on this development, Imanuel Baharier, general manager of Cetif Advisory, said;

“We believe it is vitally important to create the conditions for DeFi to become a safe and open operating environment for supervised entities as well.”

Asset tokenisation has become a key area of the cryptocurrency space. It allows traditional financial institutions and digital asset firms to tokenise assets like equities and bonds on blockchains. 

Asset tokenisation is gaining adoption

Asset tokenisation serves as a way for some TradFi companies to leverage blockchain technology. Market experts believe that tokenisation could change how people transfer value and also help investors store value across numerous industries. 

With asset tokenisation, transactions could become faster while the costs of the transactions could become cheaper. Thus, creating a more efficient global financial ecosystem.