A report published by The Depository Trust & Clearing Corporation (DTCC), Clearstream, Euroclear and the Boston Consulting Group (BCG) presents a new framework for interoperability, aiming to enable ‘the secure and scalable adoption’ of digital assets.
The joint report, published on Wednesday, March 4, states that interoperability is critical for cryptocurrencies to “reach their full potential” in traditional capital markets. It emphasizes the need for an open, neutral and trustworthy infrastructure to support the integration of what it calls ‘digital asset securities’, or DAS, into the mainstream financial sector.
In unraveling the current state of blockchain interoperability, the report highlights the problem of fragmentation between public and permissioned blockchains as Layer 1 and Layer 2 chains continue to proliferate.
“This diversity is increasing as setting up new chains becomes easier: modular stacks and rollup-as-a-service providers allow institutions to launch customized L2s with configurable data availability, privacy, and permissions in weeks instead of years,” the report said.
The research also highlights global regulatory fragmentation, arguing that this contributes to the “structural inefficiencies” of blockchain implementation in traditional capital markets.
“The operating model is evolving into a network of networks, with standards, gateways and regulated service providers that link on-chain objects to off-chain financing,” the report said.
The proposed framework also states that integrating digital assets into TradFi systems requires interoperability not only between blockchain networks, but also between L1s and L2s, traditional bank ledgers and Central Securities Depository ledgers (CSDs ledgers). The report reads:
“interoperability can be defined as ‘the ability to exchange assets between ledgers – DLT and traditional – while maintaining the integrity, ownership rights and lifecycle of the assets, in full compliance with laws and regulations’
In December, DTCC received permission from the U.S. Securities and Exchange Commission (SEC) to test tokenized versions of securities it already owns, and later that month it announced that the tokenization pilot would use institution-targeted Layer 1 Canton.
DTCC, Clearstream and Euroclear are major players in post-trade services, providing settlement and custody solutions for securities in global markets.
This initiative joins other industry efforts, such as Intercontinental Exchange’s strategic investment in OKX, as The Defiant reported earlier today.
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