Deutsche Bank is actively working on Project Dama 2, an Ethereum-based Layer 2 (L2) blockchain network to enhance transaction efficiency and integrate regulatory safeguards.
Deutsche Bank, Germany’s largest financial institution, is reportedly developing a proprietary blockchain solution utilising ZKsync technology and based on the popular network Ethereum.
This initiative aims to address compliance challenges associated with public blockchains in regulated finance. The project known as Dama 2 is part of the Monetary Authority of Singapore’s Project Guardian, a collaborative cross-industry effort which brings together 24 financial institutions to explore blockchain-based asset tokenization.
The platform under development is specifically designed to align blockchain transparency with financial compliance requirements, curating trusted validators and granting regulators required oversight to minimise risks such as interacting with sanctioned entities. It is reportedly created in collaboration with crypto firms Memento Blockchain Pte. and Interop Labs.
The L2 solution, a secondary protocol built on top of an existing blockchain network (Layer 1), will integrate directly with Ethereum, allowing banks to freely explore public blockchains, customise validator lists for digital-asset transactions, and enable regulators to exercise some monitoring authority over such transactions. This approach aims to enable financial institutions to interact more with decentralised networks while also remaining prudent and maintaining compliance with regulatory standards.
Deutsche Bank plans to launch the platform as a minimum viable product in 2025, pending regulatory approval. This development signifies a significant step toward integrating blockchain technology into traditional banking systems, potentially prompting other institutions to adopt similar approaches.
The institution itself has long exhibited interest in crypto-related services and cooperation with blockchain and cryptocurrency service providers. The top German bank offers fiat-to-crypto exchange and cross-border trading services to crypto companies, and also partners with digital asset service provider Taurus to provide cryptocurrency custody options. Moreover, Deutsche Bank also cooperates with Bitpanda by processing its German customer deposits and withdrawals in real-time.
