- The Bank of Italy’s innovation center, Milano Hub, is pioneering a DeFi project involving Polygon Labs and Fireblocks to allow traditional financial institutions to engage with DeFi and tokenized assets.
- Key players like Intesa Sanpaolo, Italy’s largest banking group with over $1 trillion in assets under management, are involved in this initiative, underlining the growing interest in DeFi and blockchain solutions in the traditional financial world.
Polygon and Fireblocks Catalyzing DeFi and Tokenization for Italian Financial Institutions
Italy’s Central Bank is leading the charge in the exploration of decentralized finance (DeFi) and tokenized assets in the traditional financial ecosystem. In a bold move, the bank’s innovation hub, Milano Hub, has selected Ethereum scaling network developer Polygon Labs and crypto infrastructure provider Fireblocks for a trailblazing DeFi project.
This initiative, named the Institutional DeFi for Security Token ecosystem, is designed to offer Italian banks, asset managers, and financial institutions a secure, regulated platform to experiment with security tokens and execute transactions using DeFi infrastructure.
The involvement of prominent financial institutions, such as Intesa Sanpaolo, Italy’s largest banking group, underscores the significant interest in the potential of DeFi and blockchain within the traditional financial sector. This project signifies a noteworthy shift in the Italian financial landscape as banks and financial institutions strive to adapt to the new realities of digital finance.
The move is timely as financial institutions worldwide are exploring the incorporation of blockchain technology into existing payment systems. Additionally, the tokenization trend is rapidly gaining momentum, as traditional finance (TradFi) institutions and digital asset firms are repackaging conventional instruments like bonds and equities onto the blockchain.
A Collaborative Endeavor Towards DeFi
The development of the DeFi platform will be led by Cetif Advisory, a consultancy arm of Milan’s Cetif Research Centre at Università Cattolica del Sacro Cuore. Cetif Advisory will synchronize the combined efforts of Polygon Labs, Fireblocks, tech developer Reply, legal and tax consultant Linklaters, and web3 studio DVRS.
The project is expected to create a more efficient, fast, and cost-effective financial infrastructure, aligning with a Bank of America report which suggested that tokenization
“may reshape how value is transferred, settled, and stored across every industry.”
Despite the initiative’s experimental nature, Imanuel Baharier, the general manager of Cetif Advisory, emphasized the importance of establishing a “safe and open operating environment for supervised entities” in the burgeoning DeFi space. As of now, there are no plans for the commercial application of this project, according to the press release.