What’s DTCC’s role in the digital asset ecosystem?
At DTCC, we’re working closely with the industry to build the digital infrastructure of the future. As a critical market infrastructure for the global financial markets, we are committed to providing the same level of support and services for digital assets tomorrow as we do for traditional securities today.
One of the great strengths of traditional markets, particularly U.S. markets, is that we have one highly regulated, proven post-trade organization that’s providing safety, security and reliability. In digital markets, however, there’s been a lack of leadership and engagement from one central organization. We recognize that it may seem counterintuitive to call for centralization within the context of DeFi – or decentralized finance. However, we believe that central securities depositories (CSDs) will continue for the foreseeable future to bridge traditional and digital assets by providing a good control location with centralized data.
The standards, controls and smooth processes that have typically underpinned traditional markets are exactly what’s missing from the digital world. This is where DTCC Digital Assets comes in. We’ve effectively combined DTCC’s five decades of trust and robust controls and processes, with the leading tech capabilities we acquiredfrom Securrency in late 2023.
To advance the digital asset ecosystem, our focus continues to be engaging with the industry and rolling out solutions that foster adoption and ultimately the success of the digital asset ecosystem.
What do you think are some of the drivers of adoption for digital assets this year and beyond?
Last year was a great year for digital assets. We saw more institutional investors coming to the table and milestone events like the SEC’s approval of Ethereum and Bitcoin ETFs in the U.S., as well as the first stages of the EU’s MiCA regulation coming into effect.
Looking forward, we need to stop experimenting in silos and start collaborating across the industry. Our past efforts have proven the benefits of this technology. Now is the time to work together to put real applications on the ledger using tokenization. Instead of one-off experiments that don’t make it to production and real-world use, we’re focused on bringing market participants together to foster scalable and collaborative adoption of this technology.
As part of this, we recently launched DTCC Digital Launchpad, an industry sandbox that brings together market participants to clear the path to scalable adoption of digital assets. We call it Launchpad because it effectively jump-starts digital asset initiatives. It provides a DLT infrastructure – with capabilities from the DTCC Digital Assets product suite – for market participants to explore the impact of digital technology without needing to make large investments in technology and people to run the experiment.
As an industry sandbox, we’re prioritizing experiments that have a clear path to production. At the same time, we’re focusing on initiatives that can build upon each other incrementally, all in the service of building an efficient digital market infrastructure and standards.
My aspiration is that by the end of 2025, we’ll have scalable solutions operating on-chain, integrated with legacy infrastructure where appropriate.
How do you think the digital assets space will evolve in the next decade?
Over the next decade, we’ll continue fortifying the foundation of the digital assets ecosystem. A successful ecosystem should feature more transparency, efficiency, new liquidity and business opportunities, as well as more accessibility. We’ll likely see transformation in areas like collateral and private markets.
Before we get there though, we need to work together in support of a larger goal: advancing a robust infrastructure, alongside the standards and governance, to ensure the safety and soundness of digital markets. Standards, in particular, will be key to tackling one of the major hurdles to adoption: enabling different platforms and systems – both on-chain and legacy – to work together. That’s why DTCC has already begun collaborating with the industry to build rules of engagement and to further constructive discussions on this topic.
There’s also a significant opportunity to harmonize fragmented data standards that exist across traditional and digital markets, addressing different definitions and structures for data. That’s why we’re looking forward to launching new platforms soon that address some of the data challenges firms face today.
We truly believe that this technology is the future of financial markets. But we cannot do this alone. We’re excited to serve as the center-of-gravity for this critical initiative, bringing the industry together to collectively shape the digital markets of the future.