Bank of Italy's Innovation Hub to Work with Polygon and Fireblocks on DeFi Project
The Bank of Italy announced a partnership with the Ethereum scaling team Polygon and crypto infrastructure provider Fireblocks to initiate a pilot program aimed at establishing a regulated platform for "institutional DeFi."
This collaboration sets a landmark as it involves a G7 Central Bank, financial regulators, and associations of banks working together on a large-scale tokenized asset initiative.
The project will be developed in conjunction with Milano Hub, the innovation center of Italy's central bank.
The concept of DeFi, or decentralized finance, revolves around innovative financial technology that operates on decentralized protocols, intending to provide inclusive and transparent financial services.
Milano Hub expressed its excitement about exploring the potential of blockchain technology and the DeFi sector, even amidst the negative sentiment that has affected the blockchain industry recently.
The DeFi pilot program aims to create a regulated environment for security token trading while exploring various designs for the same.
This partnership also highlights how major financial institutions remain interested in blockchain technology and its potential despite recent global crackdown.
Italy's approach to regulating crypto has been evolving, and the government's 2023 budget, passed in December, introduced a 26% capital gains tax on crypto profits.
Earlier, in a 34-page report published in June, the Bank of Italy criticized cryptocurrencies for not addressing promises regarding the efficiency, resilience, and transparency of the financial system.
The report also called for tighter regulations to mitigate risks associated with the sector, while still expressing support for DeFi and regulatory-compliant crypto activities.
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