According to Odaily, Deutsche Bank AG is addressing regulatory challenges faced by financial institutions when using public blockchains, such as the risk of inadvertently transacting with criminals or sanctioned entities. In November, the bank launched a pilot project, Project Dama 2, which includes a Layer 2 platform. Boon-Hiong Chan, Deutsche Bank's Head of Industry Application Innovation for Asia-Pacific, stated in an interview that the bank's Layer 2 is integrated with Ethereum. Chan highlighted that public blockchains like Ethereum pose risks for regulated lenders, including uncertainty about who is validating transactions, whether transaction fees might be paid to sanctioned entities, and unforeseen hard fork threats. He noted that using two chains could potentially resolve many regulatory issues.Dama 2 is part of Singapore's Monetary Authority's "Project Guardian," involving 24 major financial institutions to test blockchain technology for asset tokenization. Supporters, including Deutsche Bank, view blockchain as an opportunity to address the compression of profit margins in financial services. However, there remains uncertainty about the extent to which banks should engage with the crypto ecosystem. The Dama 2 platform was developed in collaboration with cryptocurrency companies Memento Blockchain Pte. and Interop Labs, utilizing ZKsync technology. The bank aims to launch it as a minimum viable product next year, pending regulatory approval. According to Chan, its Layer 2 component allows banks to experiment with public blockchains freely, enabling them to curate a "more customized list of validators." Other benefits include potentially granting regulatory authorities—and only them—"super administrator rights," allowing them to review fund flows when necessary. Chan remarked, "You no longer rely on L1 for detailed transaction records."