Polygon Partners With Bank of Italy To Create DeFi Ecosystem

Polygon Partners With Bank of Italy To Create DeFi Ecosystem

Key Insights:

  • The Italian central bank is supporting a project to create a DeFi ecosystem.
  • The companies include Polygon and Fireblocks, amongst others
  • Polygon's partnership with the Bank of Italy is expected to boost the price of MATIC

The Italian central bank is collaborating with a consortium of companies to enable traditional finance to evolve into the DeFi ecosystem.

They would work together to launch the "Institutional DeFi for Security Token Ecosystem Project." 

Polygon Labs
Polygon Labs

This development comes from Italy's recent regulation of crypto domestically. The 2023 budget includes a 26% capital gains tax on crypto profits. 

Although the Bank of Italy slammed crypto in a report for underdelivering on its promises, it pledged to support the growth of DeFi. Well, they sure did. 

Bank of Italy
Bank of Italy

What is the Polygon DeFi Program About?

Milano hub, the innovation centre of Italy's central bank, is the convener of the DeFi project. It chose a project proposal by Certif Advisory, amongst others.

Certif Advisory would lead the other companies, including the Ethereum scaling solution Polygon, crypto custodian Fireblocks, Web3 studio DVRS, technical developer Reply, legal and tax consultant Linklaters, Italian banks, asset management firms, and financial institutions.

The program intends to build a regulated environment for exploring security token trading, tokenization of assets, and executing transactions using DeFi applications.

Based on analytic projections, the tokenized securities market could reach $4 trillion to $5 trillion by 2030.

Polygon DeFi program
Polygon DeFi program

Unsurprisingly, banks and other financial companies are interested in participating in it. 

The selected projects would get developmental support from Milano Hub for six months in the form of regulatory studies, financial expertise, conferences, and events with representatives from the project. It would, however, not get marketing support.

What Impact Can It Have?

The project's main objective is to enable institutional market users to participate in DeFi activities while obeying the regulations.

Milano hub seemed bullish ahead of the project, 

"DeFi is an innovative financial technology based on decentralized protocols that aim to replicate existing financial services inclusively and transparently."

Certif Advisory was equally enthusiastic. The general manager Imanuel Baharier opined that the whole financial system could benefit from the partnership.

"We believe it is vital to create the conditions for DeFi to become a safe and open operating environment for supervised entities as well."

The global head of Institutional Capital at Polygon Labs, Colin Butler, also said,

"It's groundbreaking to see a G7 Central Bank, the regulator, and associations of banks and funds collaborate in this way on a large-scale tokenized asset initiative."

"This is another great example of institutions seeing the relevance of blockchain to their business processes and choosing Polygon as the infrastructure layer to launch their DeFi ecosystem."

With Polygon chosen as the lead platform for the DeFi project, there's bound to be an effect on the price of its native token, MATIC.

Where does MATIC stand?

MATIC is down by 17% in the last 11 days, bringing its value to $0.73, with its price indicators going from bullish to bearish. However, the partnership of the Bank of Italy with Polygon is expected to boost the price of the MATIC token.

MATIC price action
MATIC price action

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

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