The Bank of Italy’s innovation hub, the Milano Hub, has launched a DeFi project to help financial institutions dabble in tokenized assets. The project, called Institutional DeFi for Security Token, will be supported by Polygon Labs, Fireblocks, and other industry players.
Milano Hub is both a physical and virtual space where public and private entities collaborate to promote the digitization of Italy’s financial system. It serves as an innovative platform for experimenting with and implementing groundbreaking FinTech initiatives. The hub’s primary objectives include ensuring the stability and competitiveness of the financial system, safeguarding customer interests, and enhancing payment system reliability, all under the supervision of the Bank of Italy.
The project aims to help traditional financial institutions experiment with security tokens and execute transactions using DeFi rails in a safe, regulated manner. Tokenization is the process of converting assets into digital tokens that can be traded on blockchain networks. It is a growing trend, with the benefits of fractionalization, increased liquidity, and transparency being key drivers for adoption. As the infrastructure and regulatory frameworks mature, it is likely that more industries will adopt this technology.
Bank of Italy’s move is seen as a sign of the growing interest in DeFi among traditional financial institutions. DeFi is a financial system that is built on top of blockchain technology and does not rely on traditional financial institutions.
The project will involve Italian banks, asset managers and financial institutions, according to the press release, including the country’s largest banking group Intesa Sanpaolo, with more than $1 trillion (975 million EUR) in total assets under management.
Taking charge of this groundbreaking initiative is Cetif Advisory, an esteemed consultancy spinoff from Milan’s renowned Università Cattolica del Sacro Cuore’s Cetif Research Centre. They will spearhead the platform’s development and harmoniously coordinate efforts from various entities. Among these brilliant minds are Polygon Labs, Fireblocks, tech developer Reply, legal and tax consultant Linklaters, and the innovative web3 studio, DVRS. With such an extraordinary coalition, this project promises to carve a path towards the future of financial technology in Italy, unveiling novel possibilities and opportunities for the entire industry.
“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,” said Imanuel Baharier, general manager of Cetif Advisory, which is leading the project.
The launch of the Institutional DeFi for Security Token project is a positive development for the DeFi ecosystem. It shows that DeFi is gaining traction among traditional financial institutions, and it could help to accelerate the adoption of DeFi by mainstream investors.
The project could have a number of implications for the financial industry, including the development of new financial products and services, making it easier for investors to access tokenized assets, and reducing the cost of financial transactions.
The project is still in its early stages, but it has the potential to be a major breakthrough for DeFi. It could help to mainstream DeFi and make it more accessible to a wider range of investors.