The Depository Trust & Clearing Corporation (DTCC) has joined the ERC3643 Association, the body that oversees the ERC-3643 standard for permissioned real world assets (RWA) tokens. The standard was initially created by Tokeny, and when the DTCC unveiled its ComposerX solution for tokenization in January, it said that ERC-3643 was one of the main standards it supports. The association now has at least 20 members, including fund administrator Apex and Invesco.
Ethereum compatible tokens operate as smart contracts. Hence, the standard is a series of smart contracts that support the issuance, transfer and management of permissioned tokens.
“DTCC’s commitment to the open-source ERC3643 token standard aligns perfectly with our vision of creating a more efficient and secure financial market,” said Nadine Chakar, Global Head of DTCC Digital Assets, saying it is “another milestone in our ongoing strategy to engage best-in-class technologies to build the next generation of financial market infrastructure.”
The DTCC is the world’s largest central securities depository (CSD) and central counterparty (CCP). It’s been working with European CSDs Clearstream and Euroclear to help to establish standards for financial services firms to adopt tokenization.
Which technologies will CSDs adopt?
CSDs are currently split between three distinct DLT technology choices: Ethereum, Canton and Corda. The DTCC favors Ethereum, and its ComposerX solution supports Ethereum compatible chains. The Japan Securities Clearing Corporation (JSCC) has also been trialing DTCC’s platform.
Meanwhile, Clearstream’s D7 runs on Digital Asset’s Canton blockchain technology. While Euroclear’s D-FMI tokenization platform is based on R3’s Corda blockchain, it is also exploring Canton for collateral purposes. A Euroclear executive told Ledger Insights that Euroclear doesn’t work exclusively with R3. Its D-FMI platform is for primary issuance and is integrated with its legacy system, which enables interoperability. Hence, it’s viable to issue a token on Corda and use Canton for collateral applications. Hong Kong’s CSD, CMU, is also a Canton user and part of the Canton Network governance, although it’s unclear whether it’s restricting itself to a single technology.
Another CSD, the SIX Digital Exchange (SDX), uses Corda.
At the same time, several jurisdictions are exploring regulatory changes to reduce the requirement to use CSDs. Large parts of the CSDs role potentially can be performed by a combination of a blockchain ledger and smart contracts that automate bond coupon payments and other lifecycle events. Hence, Europe has its DLT Pilot Regime experimenting along these lines. And BX Digital, part of Boerse Stuttgart, received the green light to launch a DLT trading platform in Switzerland, under special laws that don’t require a separate CSD license.
