• Deutsche Bank (DB) is building infrastructure for tokenized cash, collateral, and funds, aiming to enable 24/7 trading and near-instant settlement by 2025-2026.
  • The bank's Dama 2 initiative, an institutional Ethereum Layer 2 platform, is central to these efforts, with partnerships and regulatory clarity driving adoption.
  • Tokenization could reduce reserve balances, expand intraday repo markets, and eventually reshape U.S. interest rate benchmarks.

A Push for 24/7 Markets

Deutsche Bank is advancing plans to integrate tokenization into core market infrastructure, according to executives familiar with the strategy. The bank's Dama 2 (Digital Asset Management Access 2) platform, built on an institutional Ethereum Layer 2, is designed to host tokenized funds and real-world assets, enabling near-instant settlement and round-the-clock trading. A minimum viable product is expected to launch in 2025, with broader rollout in 2026.

“Tokenization reduces settlement latency and improves funding efficiency,” said a Deutsche Bank spokesperson, who declined to comment on specific timelines. The move comes as regulators in Europe and the U.S. increasingly accommodate tokenized assets as collateral, with the EU's MiCA framework and ECB's acceptance of DLT-based assets providing a clearer path.

Collateral and Benchmark Implications

The bank sees tokenized money market funds as a key growth area, potentially reducing the need for traditional reserve balances. Intraday repo markets could expand as tokenized collateral becomes more fluid. Over time, widespread adoption might alter the dynamics of U.S. interest rate benchmarks, such as SOFR, as funding patterns shift.

Deutsche Bank is not alone. Citi (C), HSBC (HSBC), and other European lenders are pursuing similar tokenized deposit and bond initiatives. However, Deutsche's focus on an institutional L2 platform with built-in compliance and regulator access could give it an edge in attracting large asset managers.

Regulatory Tailwinds

The EU's MiCA regulation, fully in force, and the ECB's recent decision to accept DLT-based assets as eligible collateral have created a supportive environment. In the U.S., policy developments around custody and settlement remain uncertain, but Deutsche Bank is positioning for cross-border rollouts.

“Regulatory clarity is critical for institutional adoption,” noted a senior executive involved in the project. “We're seeing that in Europe, and it's a model for other regions.”

Looking Ahead

While the technology holds promise, challenges remain. Interoperability with legacy systems, custody standards, and robust risk controls are essential. Deutsche Bank plans to phase in client onboarding and asset coverage, guided by regulatory feedback.

“This is not just a pilot—it's an evolution of market infrastructure,” the executive added. Without such efforts, the bank risks being left behind as tokenization reshapes finance.

Correction: An earlier version of this article misstated the launch timeline for Dama 2. The MVP is scheduled for 2025, not 2026.