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DTCC and Chainlink launch pilot program with US banking giants
Last Updated: May 17, 2024 2:49am EDT | 2 minute read
The Depository Trust and Clearing Corporation (DTCC), the world’s largest settlement system, has partnered with blockchain oracle Chainlink to conclude a pilot program involving several major banking firms in the United States.
The main objective of the program was to improve the tokenization of traditional financial funds.
The pilot program, known as Smart NAV Pilot, focused on establishing a standardized method for providing net asset value (NAV) data for funds on blockchain.
Chainlink’s Cross-Chain Interoperability Protocol (CCIP) has played a key role in achieving this goal.
Structured data could be provided on-chain
According to The DTCC reportthe program demonstrated that structured data could be provided on-chain, paving the way for various on-chain use cases such as tokenized funds and “bulk consumer” smart contracts, which contain data for multiple funds.
The positive results of the pilot program have implications for future exploration of the industry 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 report found that the program facilitated more 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 data on prices.
Major 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 US Bank.
Following the release of the DTCC 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 cryptocurrency market rally.
Interest in RWA tokenization on the rise
The DTCC report coincides with 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 that represent shares of the fund, which primarily invests in assets such as U.S. Treasury bonds.
Operating as an ERC-20 token called BUIDL, the fund is often referred to as a “digital liquidity fund” due to its digitized nature on the Ethereum blockchain.
As reported, the TVL for RWA protocols rose to almost 8 billion dollars by the end of April.
Certain protocols have played a significant role in driving this growth, especially in terms of active users.
Digital carbon market platforms such as Toucan and KlimaDAO, as well as real estate tokenization protocol Propy, have seen substantial user growth.
Tokenized Treasuries have also seen notable expansion as yields remain elevated amid high inflation and interest rates in the United States.
The RWA.xyz platform saw a record $1.29 billion locked Tokenized US Treasuries and bondswhich represents an 80% increase from the beginning of 2024.
Also in March was DigiFT, a fintech company based in Singapore announced that he had made a raid into the realm of digital assets with the launch of its US Treasury Bill Depositary Receipt (DR) tokens.