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advisory

Cetif Advisory, Institutional DeFi For Security Token project kicks off

Edited by CompanyBank | S.V.
30.03.2023
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Edited by CompanyBank | S.V.

Cetif Advisory, a consulting spin-off of Cetif, Research Center of the Universita' Cattolica del Sacro Cuore in Milan, launches the ecosystem project Institutional DeFi For Security Token.

The goal of the initiative, carried out with the collaboration of Reply, Fireblocks and Linklaters, is to create the first Italian ecosystem for Institutional DeFi experimentation, enhancing the Security Token tool for the secondary market.

The objectives of the project

The aim of the project, is to develop a platform that enables institutional players to act in this environment within the guidelines and regulatory requirements, while offering their clients financial services typical of the DeFi ecosystem, thus limiting risk.

The Institutional DeFi for Security Token project involves banks, SGRs and other players in the Italian financial landscape. The project remains open to the entry of any other interested financial institutions in the next two months.

Initial co-design meetings are currently underway with participants of the platform, which will be tested in an ecosystemic and precompetitive manner starting in September 2023.

What is DeFi?

DeFi is a financial trend based on decentralized protocols (enabled by Blockchain permissionless technology and smart contracts) that aim to replicate existing financial services in an inclusive and transparent way.

However, DeFi services to date are mainly adopted by retail investors who operate in a natively deregulated environment without protections and are exposed to significant risks.

In order to enable institutional figures to act in this environment as well, platforms are being developed that allow institutions to interact within DeFi in compliance with regulatory requirements.

The study of Cetif Advisory

Research on the topic of DeFi conducted by Cetif Advisory with leading financial institutions between June and October 2022 points out that financial institutions see Decentralized Finance as a strategic advantage (92 percent) and a source of innovation for the financial sector (100 percent).

According to the survey, the main obstacle toward approaching and adopting DeFi is the lack of regulatory framing. Institutions that participated in the survey also shared that the use cases of greatest interest for early concrete experiments with a view to Institutional DeFi are custody services and decentralized exchange, using AMM and Liquidity Pool.

"We believe it is vital to create the conditions for DeFi to become a safe and open environment," explains Imanuel Baharier, general manager of Cetif Advisory . We believe that tremendous benefits can accrue to the entire financial system from such openness."