Deutsche Bank Develops Ethereum-Based Layer-2 Blockchain

Deutsche Bank, Germany's leading financial institution, is reportedly working on a layer-2 blockchain solution built on Ethereum's ZKsync technology.
This initiative is part of the bank’s broader strategy to tackle the compliance issues associated with utilizing public blockchains within the heavily regulated finance sector.
The blockchain solution, which forms part of Project Dama 2, aims to streamline transaction processes while ensuring robust regulatory controls. This platform will operate directly on Ethereum, as detailed by Bloomberg, and is integrated into the Monetary Authority of Singapore’s Project Guardian, a collaborative effort involving 24 financial institutions to explore blockchain applications in asset tokenization.
The bank’s blockchain initiative is designed to offer trusted validators and grant regulators heightened visibility, helping mitigate risks such as involvement with sanctioned entities. By aligning blockchain transparency with regulatory frameworks, Deutsche Bank aims to create a secure and compliant environment for financial operations.
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The move suggests that Deutsche Bank is keen to explore blockchain technology while tackling its regulatory challenges, a strategy that could influence other financial institutions to adopt similar technologies or provide asset services. If successful, the bank’s approach might pave the way for broader integration of decentralized networks within the financial system.
Deutsche Bank plans to release a minimum viable product of its layer-2 blockchain in 2025, pending regulatory approval. Layer-2 networks, which operate on top of Ethereum’s base layer, offer enhanced transaction speed and lower costs. Additionally, these networks provide tools for regulators, such as “super admin rights,” to monitor and audit transactions as needed.
In a related development, Deutsche Bank entered into a partnership with Crypto.com on December 10, to offer corporate banking services across the Asia-Pacific region, including Singapore, Australia, and Hong Kong. This partnership expands Deutsche Bank’s offerings to include fiat-to-crypto exchanges and cross-border trading services for crypto companies.