DTCC, Digital Asset pilot proves tokenized assets can optimize UST collateral

The completion of the U.S. Treasury collateral network pilot "successfully demonstrated the power of tokenization – and its potential to enhance collateral mobility and unlock liquidity," Nadine Chakar, global head of DTCC Digital Assets, said in a statement on Monday. The pilot, conducted in June and July, was an initiative focused on leveraging distributed ledger technology (DLT) applications to support market connectivity across the collateral management lifecycle to enhance mobility, liquidity and transactional efficiency of tokenized assets. Tokenized assets are digital representations of real-world assets, such as stocks, bonds or commodities, that exist on a blockchain. By enabling faster, more secure transactions and streamlined management processes, such assets could offer improved liquidity, transparency and efficiency. In the case of the UST Collateral Network Pilot, it proved the feasibility of more complex real-world transactions, including the creation of a digital twin of USTs, utilizing the tokenized UST assets in real-time to satisfy margin calls, completing asset recalls, and evidencing secured party control over the assets in closeout scenarios. The pilot involved blockchain solutions provider Digital Asset, four investors, four banks, two central counterparties, three custodians/collateral agents, and a central securities depository. Together they operated 14 so-called Canton nodes, connecting four types of cross-application transactions through ten distributed applications, leveraging The Depository Trust & Clearing Corp.'s LedgerScan solution to support dynamic tracking and governance of the assets involved in the pilot transactions. Participants successfully executed 100 transactions, demonstrating tokenized collateral assets' strong functionality and potential. This pilot builds on the successful Canton Network Pilot completed in December, which established the foundation for composable applications across a global economic network. The results come as a number of traditional financial heavyweights, such as JPMorgan Chase ( JPM ), Charles Schwab ( SCHW ) and Fidelity Investments, have shown growing interest in the blockchain space. In 2021, for instance, HSBC ( HSBC ) and IBM ( IBM ) successfully tested an advanced token and digital wallet settlement capability with direct transactions between two central bank digital currencies in a hybrid cloud environment. More on the Blockchain Industry BKCH: Good Overall Blockchain Exposure Becoming A Bitcoiner: Understanding Blockchain Technology And Metcalfe's Law Ethereum's journey from a visionary project to a cornerstone of blockchain tech