Milan, ITALY – 26th July 2023 - Milano Hub, the Innovation Centre of the Bank of Italy, the central bank of Italy and part of the European System of Central Banks, has selected Cetif Advisory’s ecosystem project as part of its second Call for Proposals, in order to support the development of the initiative without any commercialisation purpose. The ecosystem project involves the research and experimentation of security tokens, extending the scope of analysis of this innovative type of financial instrument and the fast-growing Decentralised Finance (DeFi) industry.
Cetif Advisory - the consultancy spinoff of Cetif Research Centre of the Università Cattolica del Sacro Cuore of Milan - led the collaboration between enterprise digital asset operations platform Fireblocks, international software development company Polygon Labs, technical developer Reply, legal and tax consultant Linklaters and web3 studio DVRS, to launch the Institutional DeFi for Security Token ecosystem, with the aim of enhancing the Security Token instrument for the secondary market. A unique initiative in Italy and Europe, the project will involve leading Italian banks, asset management companies (or Società di Gestione del Risparmio, otherwise known as SGRs) and financial institutions, including AcomeA SGR - Gimme 5, Banca Mediolanum, Sella, Banca Popolare di Sondrio, Cassa Depositi e Prestiti, Credem, Euromobiliare AM SGR, Hype, Intesa Sanpaolo and Mediobanca.
The selected projects will receive developmental support from Milano Hub for six months, beginning in July 2023, via the provision of sector expertise in banking, financial and insurance matters; regulatory in-depth studies; as well as the organisation of seminars, events, conferences with representatives from the selected projects, institutions and the academic world. The support will not cover marketing activities.
DeFi is an innovative financial technology based on decentralised protocols - enabled by permissionless blockchain technology and smart contracts - that aim to replicate existing financial services in an inclusive and transparent manner. However, DeFi services are currently primarily adopted by retail investors who operate in a natively deregulated environment without protections and are exposed to significant risks. To allow institutional players to engage with this typically unregulated and permissionless environment, platforms are being developed that allow institutions to interact within DeFi in accordance with stringent regulatory compliance requirements.
The Institutional DeFi for Security Token ecosystem project aims to allow institutional players to operate in this environment in compliance with regulatory guidelines and requirements, while offering their clients financial services typical of the DeFi ecosystem, drastically mitigating security and operational risks and maintaining significant returns, while safeguarding all actors involved.
“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,” explained Imanuel Baharier, General Manager of Cetif Advisory. “We are confident that enormous benefits for the entire financial system could result from such accessibility in terms of security for institutional and professional operators, and in terms of opportunities, stability, and resilience for the whole system.”
The technological development of the Lionity platform, the first European institutional grade automated market maker (AMM) for the secondary market of security tokens, is currently in progress.