The Depository Trust & Clearing Corporation has announced the results of its U.S. Treasury Collateral Network tokenization pilot, finding “powerful capabilities and potential” for the decentralized network.
Four investors, four banks, two central counterparties, and three custodians participated in the experiment, which tested 10 different use cases. Canton Network, which focuses on financial privacy, was utilized for this effort.
“The successful completion of this pilot demonstrates that tokenized assets can be used to optimize collateral,” Kelly Mathison, chief business development officer at Digital Asset, one of the companies involved in the pilot, said in a statement.
The pilot was conducted between June and July to test the feasibility of “complex real-world transactions,” such as replicating and settling a “digital twin” of U.S. Treasuries. It also explored real-time margin calls, asset recalls, and other portfolio management services.
“In a hypothetical default scenario, the secured creditor would seize the collateral assets, transferring ownership in the atomic transaction and gaining legal certainty and control,” DTCC said in a press release.
Nadine Chakar, a longtime blockchain advocate and global head of DTCC Digital Assets, noted that the system “significantly” improves liquidity and collateral optimization, among other things.
DTCC has been experimenting with blockchain since at least 2020, when it launched a pilot program called Project Ion to test an alternative settlement method. The company is responsible for clearing hundreds of trillions of dollars worth of transactions each year.
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About the Author
Daniel Kuhn is a senior journalist and editor at The Block, covering the cryptocurrency industry with a particular focus on technology. He previously served as an associate editor at CoinDesk, where he covered the opinions/articles section. He was first published in the trade publication Financial Planning. Before pursuing journalism, he studied philosophy as an undergraduate, English literature as a graduate student, and business and economic reporting at NYU’s professional program. You can connect with him on Twitter and Telegram @danielgkuhn, or find him on Urbit as ~dorrys-lonreb.