Digital asset adoption and the implementation of distributed ledger technology (DLT) has the potential to revolutionize the securities industry. However, a lack of coordination and standardization among various DLT solutions has hindered its progress. In a recent paper, the DTCC, Clearstream, and Euroclear emphasized the need for collaboration and outlined how they can help the industry overcome challenges and embrace digital assets.
One of the key obstacles is the fragmentation of liquidity and standards. While there are several DLT solutions with significant transaction volumes, most lack broad adoption. Many solutions operate in silos and are not interoperable, limiting the potential benefits of blockchain technology. Interoperability not only requires technological integration but also the establishment of industry-wide standards.
With digital assets projected to grow to around $16 trillion in value over the next 15 years, the need for well-regulated, neutral players to provide trust, resilience, and standardized connectivity becomes increasingly apparent. Financial market infrastructures (FMIs) like the DTCC, Clearstream, and Euroclear are ideally positioned to play a crucial role in driving digital asset adoption. Their extensive experience in running regulated systems makes them natural candidates to lead the implementation of blockchain technology.
While blockchain technology poses a potential threat to FMIs as they currently function as record keepers for securities trades, they recognize the need to adapt to remain relevant. By embracing DLT and coordinating efforts, FMIs can modernize infrastructure, establish standards across DLT protocols and smart contract language, and facilitate better interoperability between ecosystems.
The DTCC, Clearstream, and Euroclear are actively involved in DLT activities. Through collaboration and coordination, they aim to bring together the industry, promote the adoption of digital assets, and leverage the potential benefits of blockchain technology. By working together, these organizations can drive innovation, overcome current challenges, and create a more efficient and interconnected securities industry.
– DTCC, Clearstream, & Euroclear. (Year). Title of Source Article. Retrieved from [URL]
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