DTCC and Chainlink Launch Pilot Program with US Banking Giants to Advance Tokenization in TradFi

2024-05-16 22:49:12

Ruholamin Haqshanas

Last updated:

May 17, 2024 02:49 EDT | 2 min read

The Depository Trust and Clearing Corporation (DTCC), the largest settlement in the world, has partnered with blockchain oracle Chainlink to conclude a pilot program involving several major banking firms in the United States.

The primary objective of the program was to enhance the tokenization of traditional finance funds.

The pilot program, known as the Smart NAV Pilot, focused on establishing a standardized method for providing net asset value (NAV) data of funds on blockchains.

Chainlink’s Cross-Chain Interoperability Protocol (CCIP) played a key role in achieving this goal.

Structured Data Could be Delivered On-Chain

According to the DTCC’s report, the program demonstrated that structured data could be delivered on-chain, paving the way for various on-chain use cases such as tokenized funds and “bulk consumer” smart contracts, which hold data for multiple funds.

The successful outcomes of the pilot program have implications for future industry exploration and 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 noted that the program facilitated better-automated data management, minimal disruption to existing market practices in traditional financial institutions, retri 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, experienced a 12.5% increase in value.

Over the past 12 months, LINK has demonstrated significant growth, gaining more than 130% amid the broader uptick in the cryptocurrency market.

Interest in RWA Tokenization on Rise

The DTCC’s report coincides with the growing enthusiasm among major traditional financial institutions for real-world asset tokenization.

On March 19, BlackRock, a leading investment management firm, introduced a tokenized money market fund called BUIDL 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.

As reported, the TVL for RWA protocols soared to nearly $8 billion by the end of April.

Some 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, DigiFT, a Singapore-based fintech company, also announced that it has made a foray into the digital asset realm with the launch of its US Treasury bill depository receipt (DR) tokens

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