Blockchain Protocol Algorand (ALGO) was up about 3% on Tuesday, as the layer 1 technology was selected to be the blockchain to support a digital guarantees platform in Italy.
ALGO was trading at around $0.223 at the time of writing, according to CoinDesk data.
Algorand joined the Bank of Italy and the Italian insurance authority IVASS at an event hosted by the Research Center for Technologies Innovations and Finance (CETIF) in Milan on Tuesday to demonstrate how bank and insurance guarantees can be issued on blockchains, according to a statement. A bank guarantee is a type of financial backstop that’s offered by a lending institution where the lender ensures that the liabilities of the debtor will be met.
The new platform is expected to come into force in early 2023 and will be the first time a European Union (EU) member state enables the use of blockchain technology for bank and insurance guarantees, according to the statement.
“We selected Algorand because of its unparalleled level of innovation and security among permissionless DLTs, as well as because of its leadership in sustainability,” said Federico Rajola, professor at the CETIF, in the statement.
The move is part of a wider initiative rolled out by the EU, dubbed “EU Recovery Plan” where the EU allocated roughly €200 billion to Italy. The program was launched to boost economic recovery following the Covid-19 crisis. Italy gained the largest allocation made to any country and was made to be used for co-grants and co-loans.
“It’s expected that a significant percentage of bank and insurance guarantees will leverage digital ledger technologies as part of Italy’s National Recovery and Resilience Plan,” said the press release.