Deutsche Bank is working to address regulatory challenges that Financial Institution Groups face when using public blockchains, such as the risk of inadvertently transacting with criminals or sanctioned entities. The bank unveiled a beta version of Dama 2, an asset services pilot project, in November. The platform includes a so-called "Layer 2", a tool that uses public blockchains to simultaneously provide cheaper and more efficient transactions. Boon-Hiong Chan, head of industry application innovation for Asia Pacific at the bank, said in an interview that Deutsche Bank's Layer 2 is connected to Ethereum, the busiest commercial channel in the cryptocurrency space. For regulated lenders, public blockchains such as Ethereum are fraught with risks, Mr. Chan said. These include not knowing "exactly who is validating transactions", whether transaction fees will be paid to sanctioned entities, and the unforeseen threat of a hard fork that would revolutionize the digital ledger. "With dual chains, these regulatory concerns should be addressed," Mr. Chan said.