According to PANews, data collected on 63 blockchain-related experiments led by G20 member central banks reveals that a significant number of projects (47% of the sample) are compatible with the Ethereum Virtual Machine (EVM). This suggests that Ethereum-based technology stacks are being widely adopted. Furthermore, an increasing number of projects are being launched on public blockchains, indicating that public, permissionless infrastructures do not conflict with regulatory requirements.
The research highlights several key facts. Innovation is always happening at the edges and is eventually adopted by existing institutions. Therefore, hindering innovation inevitably reduces the scope of mature technologies. Even though central banks are skeptical about cryptocurrencies, they are still utilizing the technology from the permissionless world in their unique contexts. If the US government stifles innovation in the Information and Communication Technology (ICT) sector, Fedwire communication might still be using telegraph machines and Morse code. Central banks are now exploring tokenization and DeFi beyond basic Central Bank Digital Currency (CBDC) and payment projects. These projects are becoming more complex and are increasingly being deployed on public, permissionless blockchains.
Some of the most interesting projects include the Mariana project, a cross-border foreign exchange project using tokenized central bank currency and the Ethereum Sepolia test network's AMM (Automated Market Maker), and the Guardian project, which aims to build liquidity pools, structured notes, and asset-backed securities for trade finance using Ethereum's second-layer solutions.
Predicting how many projects will be deployed on public networks by 2024 is premature, but it is expected that more projects will emerge. As previously mentioned, the Monetary Authority of Singapore (MAS) has launched some of the most innovative projects in this field. MAS is an undisputed leader in this area, and its actions indicate that deploying projects on blockchains with permissionless validator sets does not inherently violate sanction laws.
Network effects are crucial, and it is believed that Ethereum has the most robust developer ecosystem among today's major primary chains. According to rumors, some traditional financial institutions have abandoned proprietary enterprise blockchains and chosen EVM-based blockchains due to the strength of the developer community.
Open-source software has been battle-tested. Most of the internet currently runs on Linux-based servers, and the future of the financial industry will be no exception. Cryptocurrencies often have adversarial characteristics, but a frequently underestimated benefit is that projects deployed on public blockchains (and the blockchains themselves) have undergone significant stress tests in the wild, whether in terms of security or economic design.
The US is lagging behind but has the opportunity to create a positive feedback loop. In the sample, the US completed five public projects, while Singapore, with a significantly smaller capital market size, completed eight projects. As long as other countries continue to utilize EVM-based open-source software projects, the US has the opportunity to lead by being home to many of the most ambitious builders. As US technology is exported to other parts of the world, American values will also be disseminated.
