Digital asset infrastructure company BitGo is partnering with ZKsync, a leading Ethereum Layer 2 scaling protocol, to develop fiat tokenization infrastructure for banks.
The resulting products will be regulatory-compliant and institutional-grade settlements, with all the benefits of blockchain technology – 24/7 availability, instant settlements, security, and privacy.
BitGo brings fiat to blockchain
BitGo has been at the forefront of developments in the crypto space since its launch in 2013. One of its best creations is multi-sig wallet technology, which has greatly improved security in the ecosystem and even encouraged institutional uptake of said wallets.
Its latest partnership now addresses the need for banks to tokenize fiat deposits to enable faster settlements and underpin new financial products.
Unlike asset tokenization led by Ripple Labs, this infrastructure will bridge fiat and blockchain without requiring stablecoins.
The project is currently in its testing phase, with high expectations of massive institutional uptake following its official deployment later this year.
The stablecoin dilemma
There has been a long-standing disagreement between banks and stablecoin issuers on the grounds that stablecoin yields diminish bank deposits.
A draft of the Clarity Act attempted to address this situation, but the latest challenge emerged when Coinbase rejected a ban on stablecoin yields.
While the BitGo-ZKsync partnership does not resolve this issue, it brings a whopping $450 trillion in traditional finance funds to blockchain.
BitGo stock (NYSE: BTGO) was trading at $10.00 at the time of writing, 2.16% higher than the previous day’s closing price.
Source: MarketWatch
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