What is the role of DTCC in the digital asset ecosystem?
At DTCC, we are working closely with the industry to build the digital infrastructure of the future. As a key market infrastructure for global financial markets, we are committed to providing support and services to the same digital assets tomorrow as traditional securities today.
One of the huge advantages of traditional markets, especially the U.S. market is that we have a highly regulated, proven post-trade organization that provides security, security and reliability. However, in the digital market, a central organization lacks leadership and participation. We recognize that demanding centralization in the context of Defi or decentralized finance seems counterintuitive. However, we believe that the Central Securities Storage (CSD) will continue for the foreseeable future by providing a good location of control to bridge traditional and digital assets.
Usually based on the standards based on traditional markets, control and smoothing processes are exactly what the digital world lacks. This is the source of DTCC digital assets. We effectively combine DTCC’s fifty years of trust and strong controls and processes, with the leading technical capabilities of Asschierrency that we acquire in late 2023.
To advance the digital asset ecosystem, our focus continues to interact with the industry and introduces solutions that promote adoption and ultimately achieve success in the digital asset ecosystem.
What do you think is the driving force for digital asset adoption this year and beyond?
Last year was a great year for digital assets. We have seen more institutional investors coming to the desktop and milestones, such as the U.S. Securities and Exchange Commission’s approval of Ethereum and Bitcoin ETFs in the United States, and the first phase of EU mica regulations came into effect.
Looking ahead, we need to stop testing in silos and start collaborating across the industry. Our past efforts have proven the benefits of this technology. Now it’s time to use tokenization to place real applications on the ledger together. We focus on bringing market participants together to facilitate scalable and collaborative adoption of the technology, rather than a one-time experiment.
To this end, we recently launched the DTCC Digital Launchpad, an industry sandbox that brings together market participants to clear the path to scalable adoption of digital assets. We call it a launchpad because it effectively launches the digital asset program. It provides a DLT infrastructure (with the capabilities of the DTCC digital asset product suite) for market participants to explore the impact of digital technology without the need to invest heavily in technology and people to experiment.
As an industry sandbox, we prioritize experiments with clear production pathways. At the same time, we focus on initiatives that can be built step by step on each other, all serving to build effective digital market infrastructure and standards.
My wish is that by the end of 2025, we will have scalable solutions running on-chain and integrate with traditional infrastructure where appropriate.
How do you view the digital asset space that will develop in the next decade?
Over the next decade, we will continue to strengthen the foundation of the digital asset ecosystem. Successful ecosystems should have greater transparency, efficiency, new liquidity and business opportunities, and more accessibility. We may see shifts in areas such as collateral and private markets.
Before we get there, though, we need to work together to support the bigger goal: to advance strong infrastructure with standards and governance to ensure the security and soundness of the digital market. Standards in particular will be the key to addressing one of the major obstacles to adoption: getting different platforms and systems (including chains and legacy) to work together. That is why DTCC has begun working with the industry to establish rules of engagement and further constructive discussions on the topic.
There is also an important opportunity to coordinate fragmented data standards that exist in traditional and digital markets, thus addressing the different definitions and structures of data. That’s why we’re looking forward to launching new platforms soon to address some of the challenges that companies face today.
We truly believe that this technology is the future of the financial market. But we can’t do it alone. We are excited to be the center of purpose of this key initiative, thus bringing the industry together and collectively shaping the digital markets of the future.
