DTCC Acquires Blockchain Startup Securrency for $50 Million
The Depository Trust & Clearing Corporation (DTCC) has announced its acquisition of blockchain startup Securrency Inc. in a deal worth approximately $50 million. This move is part of DTCC’s strategic push into blockchain technology and services, particularly in post-trade processing for tokenized digital assets. The acquisition is expected to be finalized in the coming weeks, with around 100 Securrency employees joining DTCC after the deal.
Enabling Issuance and Trading of Securities on Blockchain Networks
DTCC CEO Frank La Salla believes that Securrency’s technology has the potential to facilitate the issuance and trading of securities, such as exchange-traded funds (ETFs), on blockchain networks. He emphasized that DTCC, as a strategic infrastructure provider to the industry, is always looking for new technologies to enhance its services. This acquisition represents one of DTCC’s significant steps towards embracing blockchain and distributed ledger technology, which can streamline complex post-trade processes in financial markets.
The Potential of Tokenizing Traditional Financial Assets
Citigroup analysts estimate that by 2023, up to $5 trillion worth of traditional financial assets could be tokenized and represented on blockchain networks. This highlights the immense potential for blockchain technology to transform the financial industry. With this acquisition, Securrency will be renamed DTCC Digital Assets and will continue under the leadership of CEO Nadine Chakar, who will also join DTCC’s management committee.
Simplifying Post-Trade Functions and Curbing Complexity
Major banks and financial institutions have developed their own proprietary blockchain platforms for post-trade functions similar to Securrency’s technology. However, this has led to concerns about duplicated efforts and increased complexity due to the lack of interoperability between different blockchain systems. DTCC aims to address this issue by promoting collaboration and working together as the industry moves beyond the experimental phase.
Advantages of Asset Tokenization
Asset tokenization can simplify trading and post-trade settlement processes while enhancing accessibility and liquidity in markets. It involves representing real-world assets, such as company shares, as digital tokens on a blockchain. For instance, Securrency’s technology enables the creation of tokenized securities like ETFs that can be traded and settled on a distributed ledger. This approach streamlines tasks like reconciliation and clearing of asset transactions, which are currently cumbersome in traditional post-trade systems.
Hot Take: DTCC’s Bold Move Towards Blockchain Transformation
The acquisition of Securrency by DTCC for $50 million demonstrates the corporation’s commitment to embracing blockchain technology and streamlining post-trade processes. By incorporating Securrency’s expertise, DTCC aims to enable the issuance and trading of securities on blockchain networks. This move aligns with the growing trend of asset tokenization, which has the potential to revolutionize financial markets. As blockchain technology matures, it becomes increasingly clear that collaboration and interoperability are crucial for its widespread adoption. DTCC is positioning itself as a key player in this transformation, ready to leverage blockchain’s benefits and simplify complex financial operations.
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