Today the Depository Trust & Clearing Corporation (DTCC) unveiled its digital asset sandbox, the DTCC Digital Launchpad. Apart from the sandbox, the DTCC also shared the results of a proof of concept with the Japan Securities Clearing Corporation (JSCC).
During 2023 the DTCC processed $3 quadrillion in post trade transactions.
The sandbox aims to pull together different types of industry participants in order to address the fragmentation already appearing within the digital securities sector, with too many organizations launching self standing blockchains.
“DTCC Digital Launchpad will unify stakeholders from nearly every corner of the financial markets to solve the challenges facing adoption of digital asset technology,” said Frank La Salla, DTCC President, CEO and Director.
As the world’s largest central securities depository (CSD) and central counterparty (CCP), the DTCC recently collaborated with two of its largest European counterparts, Clearstream and Euroclear, to release a digital assets framework.
On the one hand, these institutions are the natural industry coordinators for experimentation and launching new initiatives. However, it’s not entirely clear cut, as we previously explored. Meanwhile, the DTCC is also a contributor to the Regulated Settlement Network trials.
The Securrency factor
There are two aspects to the DTCC Digital Launchpad. One is industry focused, aiming to address critical challenges in digital asset adoption. The other is more of a DTCC offering to clients.
Last year the DTCC acquired tokenization firm Securrency, renaming it to DTCC Digital Assets. This forms part of the client solution, enabling customers to shortcut their launch. Securrency’s solution was used by asset manager WisdomTree before the acquisition and it remains a client.
“We’ve reached a critical inflection point in the adoption of digital asset technology, and DTCC is challenging the industry to rethink and reframe its siloed approach,” said Nadine Chakar, Global Head of DTCC Digital Assets. “The ultimate objective of DTCC Digital Launchpad is to bring the industry together to build production-ready, secure, and efficient digital market infrastructure and standards that will transform capital markets for generations to come.”
The JSCC proof of concept
JSCC is the clearinghouse of the Japan Exchange Group, the owner of the Tokyo Stock Exchange. It explored using smart contracts and tokenization for margin calls.
“By leveraging DTCC’s reusable blockchain-based infrastructure, we were able to jump-start our proof-of- concept, easily issuing digital assets such as cash, stocks, and bonds without needing to develop our own infrastructure. This allowed us to shift our focus to the initiative’s impact on our own business processes,” said JSCC President & CEO, Konuma Yasuyuki.
Two years ago the DTCC went live with Project Ion, a DLT-based platform for stock settlement. The distributed ledger solution (DLT) ran in parallel with the DTC’s classic settlement system, which remained the definitive record. However, the Information reported that the project was quietly shuttered.
With these sorts of projects, timing is everything. Quite a few initiatives were shuttered during 2022 and 2023, but industry engagement is currently at the highest ever.
