Deutsche Bank to Launch Ethereum L2 Using ZKsync

Deutsche Bank plans to launch an Ethereum Layer 2 solution utilizing the ZKsync stack. This was reported by Bloomberg, citing Boon-Hiong Chan, the bank’s head of applied innovation in the APAC region.

The initiative aims to address compliance challenges associated with public blockchains. The organization also intends to enhance efficiency and reduce operational costs.

According to Chan, risks in public networks include the uncertainty of “who exactly is validating transactions,” whether fees might be paid to sanctioned individuals, and the threat of forks.

“By using two chains [L2 and Ethereum], many of these regulatory concerns can be addressed,” explained the senior executive.

Chan noted that L2 would allow banks to create a “more specific list of validators.” Other advantages include the ability to provide regulators with “super-administrator rights,” offering the option to control fund movements.

L2 is part of the bank’s Project Dama 2, focusing on asset servicing. This is included in Project Guardian by the MAS, alongside 23 other initiatives from financial institutions in the field of tokenization.

The agency noted that the success of Deutsche Bank’s approach could encourage competitors to engage more with decentralized networks.

The bank aims to create a MVP by 2025 and subsequently secure regulatory approval for L2.

Earlier, analysts at Andreessen Horowitz identified tokenization as a key area for the development of the crypto industry in 2025.