DTCC and Chainlink Team Up with US Banking Giants to Propel Tokenization in Traditional Finance
Ruholamin Haqshanas
Last updated: May 17, 2024 02:49 EDT | 2 min read
The world’s largest settlement system, the Depository Trust and Clearing Corporation (DTCC), has joined forces with blockchain oracle Chainlink to successfully complete a pilot program involving major US banking firms.
The main objective of the program was to enhance the tokenization of traditional finance funds.
Dubbed the Smart NAV Pilot, the program focused on establishing a standardized method for delivering net asset value (NAV) data of funds on blockchains.
Chainlink’s Cross-Chain Interoperability Protocol (CCIP) played a crucial role in achieving this objective.
Structured Data Can Now be Delivered On-Chain
As per the DTCC’s report, the program demonstrated that structured data can now be delivered on-chain, opening doors for various on-chain use cases such as tokenized funds and “bulk consumer” smart contracts that hold data for multiple funds.
The successful outcomes of the pilot program have significant implications for future industry exploration and the enablement of numerous downstream use cases.
These include brokerage applications, more automated data dissemination, and easier access to historical data for funds.
The DTCC’s report highlighted that the program facilitated better-automated data management, minimal disruption to existing market practices in traditional financial institutions, retrieval of historical data without manual record-keeping, and broader API solutions for price data.
Prominent US banking firms actively participated in the pilot program, including American Century Investments, BNY Mellon, Edward Jones, Franklin Templeton, Invesco, JPMorgan, MFS Investment Management, Mid Atlantic Trust, State Street, and U.S. Bank.
Following the release of the DTCC’s report, Chainlink’s native token, LINK, saw a 12.5% increase in value.
Over the past 12 months, LINK has demonstrated significant growth, gaining over 130% amid the broader uptick in the cryptocurrency market.
Growing Interest in RWA Tokenization
The DTCC’s report aligns with the increasing enthusiasm among major traditional financial institutions for tokenizing real-world assets.
On March 19, leading investment management firm BlackRock introduced BUIDL, a tokenized money market fund, on the Ethereum network.
The fund allows investors to acquire tokens representing shares in the fund, which primarily invests in assets such as U.S. Treasury bills.
Operating as an ERC-20 token called BUIDL, the fund is often referred to as the “digital liquidity fund” due to its digitized nature on the Ethereum blockchain.
According to reports, the Total Value Locked (TVL) for RWA protocols reached nearly $8 billion by the end of April.
Certain protocols have played a significant role in driving this growth, particularly in terms of active users.
Digital carbon market platforms like Toucan and KlimaDAO, as well as the real estate tokenization protocol Propy, have experienced substantial user growth.
Tokenized treasuries have also seen remarkable expansion as yields remain high in an environment of elevated inflation and interest rates in the United States.
The RWA.xyz platform reported a record $1.29 billion locked-in tokenized U.S. treasuries and bonds, representing an 80% surge since the beginning of 2024.
Back in March, Singapore-based fintech company DigiFT also made its entry into the digital asset realm with the launch of its US Treasury bill depository receipt (DR) tokens.
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