The Depository Trust and Clearing Commission (DTCC) has met with the US Securities and Exchange Commission (SEC) to discuss tokenization. The meeting, which involved the US Crypto Tax Force, focused on DTCC tokenization services, among other issues.
ETF Store President Nate Geraci shared the development on X, noting that it is a massive bullish signal for the tokenization sector. DTCC is a capital markets infrastructure firm providing financial institutions with settlement, clearing, and trade reporting services.
The firm occupies a central role in the US and global financial markets with $3 quadrillion in settlement value for 2023 alone, making it the biggest financial processor in the world.
According to the agenda shared on X, SEC and DTCC examined the preliminary base of DTCC tokenization services, looking at operational flow, technology, design controls, token usage, and other issues. They also discussed how the tokenization service will evolve and the regulatory impact on the service, such as which laws would apply and where exemptions can be obtained, especially when clearing agency obligations.
The firm has already announced plans to launch a platform for tokenized collateral management in April, noting that the blockchain platform will run within its AppChain ecosystem and optimize collateral movements in the financial markets.
DTCC has been working on a tokenization platform for more than five years and tested a pilot last year in collaboration with 13 participants using the Canton Network. At the time, the firm tested ten use cases and found that tokenization could help improve liquidity and collateral optimization.
Meanwhile, the recent discussions with the SEC only show the firm is doubling down on its crypto-related integrations. In the past few months, reports have surfaced that DTCC plans to integrate stablecoin into its platform.
According to The Information, DTCC is developing its stablecoin. While there is no official confirmation from the firm, it recently released a blog post on using stablecoins as a settlement asset in payments and cross-border transactions.
It also stated that it is observing the regulatory developments from the regulatory agencies and the US Congress, and assessing its options, including the possibility of launching a stablecoin if it helps improve its core services.
Interestingly, the firm crypto and tokenization efforts have been in the works for years. In 2023, it bought an institutional-grade blockchain tech firm, Securrency, and has been experimenting with tokenization as far back as 2020.
The firm’s bullishness on tokenization was evident in its recent Congressional testimony, where its head of Digital Asset, Nadine Chakar, said that tokenization is the next step in simplifying complex financial processes. DTCC has also joined the ERC3643 Association, a non-profit aiming to make the Ethereum token the standard for tokenized securities.
Tokenization efforts are growing
Meanwhile, DTCC is not the only firm engaged with the SEC on tokenization. In fact, several financial institutions, both TradFi and crypto-focused, have recently turned their attention to the sector.
Coinbase recently sought the SEC’s approval to offer tokenized stocks on its platform in a move that could see it come closer to traditional brokerage firms. The chief legal officer, Paul Grewal, confirmed this even as it is unclear whether the exchange filed an official request or simply asked for guidance.
The crypto exchange is now waiting on the SEC to say, which could significantly impact how the sector evolves. Presently, tokenized securities are not legal in the US.
However, the current SEC administration, particularly the crypto task force, has shown strong interest in enabling tokenization even as regulations evolve. Some firms are not waiting on the SEC, with Kraken and Bybit launching tokenized securities in other jurisdictions.
Meanwhile, the massive interest in tokenized real-world assets (RWA) continues to drive the market performance. The total value of onchain RWA recently crossed the $24 billion milestone after an almost 6% increase in the last 30 days. The number of asset holders also increased by 99% to over 204,000.
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