Deutsche Bank devises a solution to resolve the regulatory obstacles associated with blockchain technology

Deutsche Bank AG is addressing the regulatory challenges that institutions encounter when utilizing public blockchains.

Deutsche Bank AG is addressing the regulatory challenges that institutions encounter when utilizing public blockchains, including the potential for unintentional transactions with sanctioned groups or offenders.

According to a Bloomberg report, the bank initiated its asset servicing prototype, Project Dama 2, in November. The layer two system of this platform is dependent on public blockchains to facilitate transactions that are both more cost-effective and efficient.

According to Boon-Hiong Chan, the innovation director for Deutsche Bank in the Asia-Pacific region, the bank’s Layer 2 links to Ethereum, one of the busiest blockchain networks.

Chan clarified that regulated institutions are at risk from public blockchains, such as Ethereum. The risks encompass the potential for unanticipated changes to the blockchain, the possibility of paying fees to sanctioned entities, and the ambiguity surrounding the individual responsible for transaction validation.

“A lot of these regulatory issues should be able to be resolved,” Chan remarked, mentioning two chains.

Project Dama 2 is one of several initiatives in Singapore’s Project Guardian, in which 24 major financial institutions are exploring the potential to tokenize assets through blockchain technology. Among other advocates, Deutsche Bank regards blockchain as a solution to financial services’ margin pressures. However, there are still uncertainties regarding the extent to which banks should engage in the cryptocurrency sector.

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