“This year can undoubtedly be called 'the year of financial asset tokenization.' The movement of traditional financial assets to the blockchain and transforming them into virtual asset tokens has spread like a trend. However, the question of 'how to manage assets that have been transferred to the blockchain' remains a challenge that needs to be addressed.”
Boon-Hiong Chan, 54, the Chief of Applied Innovation at Deutsche Bank for Asia-Pacific, and Georgios Vlachos, 31, co-founder of Axela, met with Chosun Biz at the Shilla Hotel in Jangchung-dong, Seoul, on the 14th of last month.
Deutsche Bank, established in 1870, is the largest commercial bank in Germany. With an asset size nearing $1.5 trillion (approximately 2,148 trillion won), it ranks 34th in the global banking asset rankings. Axela is a blockchain consolidation platform development company founded by Vlachos in 2020, operating a platform that connects 69 different blockchains, including Ethereum and Avalanche.
The large bank with a 200-year history and the startup blockchain developer joined hands in Singapore. Participating in the Monetary Authority of Singapore's (MAS) national blockchain project, Dama2, the two companies promised cooperation. Dama2 is a project by the Singapore government to develop a tokenization service that converts traditional financial assets into virtual assets using blockchain technology. Dama2 is also researching ways to manage financial assets on the blockchain and significantly reduce the asset management fees that have previously incurred.
Chan noted, “Large asset management companies like BlackRock and Franklin Templeton are already managing tokenized assets on the blockchain” and “Deutsche Bank also joined Dama2 while contemplating new service provision in the future financial environment.”
When asked about the reasons traditional banks are entering the blockchain business, Chan replied, “The essence of the financial industry, custodianship, does not change.” However, he explained that banks can no longer monopolize custodial institutions, so banks must pursue technological advancements as well. Chan added, “Now, it is an era where customers choose whether to entrust their assets to banks or fintech companies” and “Deutsche Bank has embarked on new attempts to identify the elements necessary for asset tokenization services and develop related technologies.”
Axela, identified as a partner of Deutsche Bank, plays a role in connecting Deutsche Bank's private blockchain with external public blockchains under Dama2. The private blockchain is a blockchain accessible only to specific individuals, akin to a financial institution's internal network. The public blockchain refers to blockchains like Bitcoin and Ethereum that anyone can use. Axela's role is to lay the bridge connecting Deutsche Bank's private blockchain and external blockchains, moving tokenized assets and information.
Vlachos stated, “There is no task as important as asset exchange in traditional finance. The same goes for finance on the blockchain.” He added, “We are considering connection methods for exchanging assets on Deutsche Bank's blockchain and those on the public blockchain.” He continued, “Axela prioritizes security. We have operated the platform for three years, recording over $10 billion (approximately 14 trillion won) in transaction volume, yet we have never experienced a security incident.”
In response to concerns that the credibility might decrease when financial assets are turned into virtual assets, Chan said, “Deutsche Bank was the first global bank to introduce electronic money in 1996,” and “At that time, there were concerns regarding the low credibility of electronic money for transferring cash over the Internet, but we focused on solving the credibility issues.” Chan explained, “The attempt to convert financial assets into virtual asset forms is an example of technology transforming the industry” and stated, “It has the potential to increase the efficiency of finance.”
Rather, Vlachos deemed the tokenization of financial assets, including Dama2, as 'disruptive innovation.' He asserted, “Tokenization will inevitably be the way all assets are managed in the future,” adding, “Existing finance faces issues like complex and slow procedures and settlement delays, but these can be resolved with blockchain and tokenization. I expect this kind of transformation to happen within the next decade.”
Deutsche Bank and Axela also forecast further collaboration after the completion of the Dama2 project. Chan stated, “If we achieve the first goal of Deutsche Bank and Axela while progressing with Dama2, we will aim to set a commercial goal next.” Vlachos also mentioned, “We started collaborating with Deutsche Bank nine months ago” and added, “Having worked together, Deutsche Bank has ample capability to establish itself as an institution leading trends in the blockchain industry. I hope that the collaborative projects with Deutsche Bank evolve into revenue-generating ventures.”
Boon-Hiong Chan, Chief of Applied Innovation at Deutsche Bank for Asia-Pacific, said
▲Master's in cybersecurity policy engineering from George Washington University ▲Market Chief of Deutsche Bank for Asia-Pacific ▲Global Chief of Securities Market and Technology at Deutsche Bank
Georgios Vlachos, co-founder of Axela, said
▲Master's in computer science from the Massachusetts Institute of Technology ▲Department Chair of Mathematics at Algorand