DTCC and Chainlink Conclude Pilot Program for Fund Tokenization


The Depository Trust and Clearing Corporation (DTCC), the world’s largest settlement system, has successfully completed a pilot program in collaboration with blockchain oracle Chainlink, aimed at advancing the tokenization of traditional finance funds. 

Several major U.S. banking firms participated in the Smart NAV Pilot program, which aimed to standardize the provision of net asset value (NAV) data across blockchains using Chainlink’s Cross-Chain Interoperability Protocol (CCIP).

DTCC and Chainlink Collaborate on Tokenization

According to a DTCC report released on May 16, the pilot program demonstrated that delivering structured data on-chain and establishing standard roles and processes can embed foundational data into various on-chain use cases, such as tokenized funds and bulk consumer smart contracts. These contracts hold data for multiple funds, facilitating a range of applications in the financial industry.

The DTCC highlighted that these capabilities could support further industry exploration and enable numerous downstream use cases. These include brokerage applications, more automated data dissemination, and easier access to historical data for funds. 

Better-Automated Data Management

The pilot also implemented better-automated data management, limited the impact on traditional financial institutions’ existing market practices, enabled clients to retrieve historical data without manual record-keeping, and provided broader API solutions for price data.

The U.S. banking firms that participated in the pilot program included American Century Investments, BNY Mellon, Edward Jones, Franklin Templeton, Invesco, JPMorgan, MFS Investment Management, Mid Atlantic Trust, State Street, and U.S. Bank.

Growing Enthusiasm for Real-World Tokenization

The success of this pilot program reflects a growing enthusiasm for real-world asset tokenization among major traditional financial institutions. This trend is evident in recent initiatives like BlackRock’s launch of a tokenized money market fund (MMF) named BUIDL on the Ethereum network. 

Launched on March 19, BUIDL offers native U.S. dollar yields and allows investors to purchase tokens representing shares in the fund, which invests in assets like U.S. Treasury bills. This fund is dubbed the “digital liquidity fund” because it operates as an ERC-20 token on the Ethereum blockchain.

Moreover, Chainlink’s LINK token has gained over 130% in the past 12 months amid a broader uptick in the crypto market, showcasing the increasing interest and investment in blockchain technology.

Chainlink and DTCC Set an Example

The completion of the Smart NAV Pilot program by DTCC and Chainlink marks a significant step towards the integration of blockchain technology in traditional finance. By enabling more efficient and automated data management processes, this initiative is poised to pave the way for more widespread adoption of tokenized financial products and services in the industry. 

As financial institutions continue to explore and implement blockchain-based solutions, the future of finance looks increasingly digital and interconnected.

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