DTCC’s U.S. Treasury Collateral Network Tokenization Pilot

The Depository Trust & Clearing Corporation (DTCC) has announced the results of its U.S. Treasury Collateral Network tokenization pilot, finding “robust functionality and potential” for distributed networks.

Participants

Four investors, four banks, two central counterparties, and three custodians participated in the experiment, which tested ten different use cases. The financial privacy-focused Canton Network was tapped for the effort.

Key Insights

“The successful completion of this pilot proves that tokenized assets could be leveraged to optimize collateral,” said Kelly Mathieson, chief business development officer at Digital Asset, involved in the pilot.

The pilot was conducted between June and July to test the feasibility of “complex real-world transactions” such as cloning and settling a digital twin for U.S. Treasuries. Additionally, the test explored real-time margin calls, asset recalls, and other portfolio management services.

In hypothetical default scenarios, secured parties seized pledged assets, transferring ownership in atomic transactions, ensuring legal certainty and control, according to DTCC’s press release.

Nadine Chakar, a longtime blockchain advocate and global head of DTCC Digital Assets, noted that the system significantly improved liquidity and collateral optimization.

DTCC’s Blockchain Journey

DTCC has been experimenting with blockchain since at least 2020, launching a pilot program called Project Ion to test alternative settlement methods. The firm is responsible for clearing several hundreds of trillions of dollars worth of transactions annually.