Interoperability Is 'Essential' for Digital Assets to Reach Their Full Potential: DTCC

A report published by The Depository Trust & Clearing Corporation (DTCC), Clearstream, Euroclear, and the Boston Consulting Group (BCG) presents a new framework for interoperability, with the aim of enabling “the safe and scalable adoption” of digital assets.

The joint report, published on Wednesday, March 4, argues that interoperability is key for cryptocurrencies to “achieve their full potential” in traditional capital markets. It emphasizes the need for open, neutral, and reliable infrastructure to support the integration of what it refers to as “digital asset securities,” or DAS, into mainstream finance.

In unpacking the current state of blockchain interoperability, the report highlights the problem of fragmentation across public and permissioned blockchains as Layer 1 and Layer 2 chains continue to proliferate.

“This diversity is widening because spinning up new chains keeps getting easier: modular stacks and ‘rollup-as-a-service’ providers allow institutions to launch bespoke L2s with configurable data availability, privacy, and permissions in weeks rather than years,” the report states.

The research also highlights regulatory fragmentation globally, arguing that this adds to the “structural inefficiencies” of implementing blockchain in traditional capital markets.

“The operating model is evolving into a network-of-networks, with standards, gateways, and regulated service providers linking on-chain objects to off-chain finance,” the report reads.

The proposed framework also argues that to integrate digital assets into TradFi systems, interoperability is needed not only between blockchain networks, but 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 across ledgers – DLT and traditional – while preserving the asset’s integrity, ownership rights and lifecycle, with full legal and regulatory compliance”

In December, DTCC received clearance from the U.S. Securities and Exchange Commission (SEC) to pilot tokenized versions of securities it already holds, and later that month, it announced the tokenization pilot would use institution-focused Layer 1 Canton.

DTCC, Clearstream, and Euroclear are key players in post-trade services, offering settlement and custody solutions for securities across global markets.

This initiative aligns with other industry efforts, such as Intercontinental Echange’s strategic investment into OKX, as The Defiant reported earlier today.

This article was generated with the assistance of AI workflows.