• Bank of Italy picks DeFi project with Polygon Labs and Fireblocks. Aims to help financial institutions explore security tokens on DeFi in a secure manner.

• Cetif Advisory leads the platform development with Polygon Labs, Fireblocks, Reply, Linklaters, and DVRS. Aiming to involve Italian banks, including Intesa Sanpaolo. 

The innovation center of the Bank of Italy has selected a decentralized finance (DeFi) initiative that involves the collaboration of Polygon Labs, a developer specializing in scaling the Ethereum network, and Fireblocks, a crypto infrastructure provider. 

The primary objective of this project is to assist financial institutions in exploring security tokens and conducting transactions using DeFi protocols in a secure and compliant manner. Italy is embracing the growing trend of tokenizing real-world assets within the cryptocurrency ecosystem, and it aims to bridge the gap between traditional finance and DeFi through its collaborations with Polygon Labs and Fireblocks.

Known as the Milano Hub, this establishment operates as the central bank’s hub for fostering innovative concepts in finance. For six months, the Milano Hub will actively support the development of an Institutional DeFi for the Security Token ecosystem. The ultimate goal of this platform is to enable traditional financial institutions to safely and compliantly experiment with security tokens and conduct transactions using DeFi protocols.

The project emerges amidst the efforts of central banks worldwide to develop central bank digital currencies (CBDCs) and investigate methods to integrate blockchain technology into the current payment infrastructure. Simultaneously, tokenization has gained significant popularity in the cryptocurrency space, with traditional financial institutions and digital asset companies tokenizing conventional assets like bonds and equities on blockchain platforms.

According to a report from Bank of America, tokenization has the potential to revolutionize value transfer, settlement, and storage across all industries. By facilitating faster transactions, reducing expenses, and establishing a more streamlined financial infrastructure, tokenization could bring about significant transformative changes.

Collaboration with Industry Leaders: Key Players and Participants

Cetif Advisory, a consulting firm associated with the Università Cattolica del Sacro Cuore of Milan’s Cetif Research Centre, will lead in developing the platform. They will coordinate the efforts of several organizations, including Polygon Labs, Fireblocks, tech developer Reply, legal and tax consultant Linklaters, and web3 studio DVRS.

The project aims to involve various Italian banks, asset managers, and financial institutions, as mentioned in the press release. This includes Intesa Sanpaolo, the country’s largest banking group, managing more than $1 trillion (975 million EUR) in total assets.

Imanuel Baharier, the general manager of Cetif Advisory, emphasized the importance of establishing a secure and regulated operating environment for supervised entities within the DeFi ecosystem.

Tokenized securities are an expanding frontier in the realm of blockchain technology. According to Citi Global Perspectives & Solutions, the market for tokenized securities has the potential to reach a remarkable value of $4 trillion to $5 trillion by 2030. Private equity and venture capital sectors lead this growth, closely followed by the real estate industry.