DTCC
Nadine Chakar speaks to Sophie Downes about her transition to DTCC Digital Assets and future trends shaping the digital landscape
How have you found the transition from Securrency to DTCC, as well as your new role as Global Head of DTCC Digital Assets?
It has been a natural transition and a great fit, which reinforces our value proposition that the powerful combination of our people, technology and reputation will enable us to drive adoption of digital assets and unlock their true potential.
It is important to note that DTCC has been actively involved with digital asset technology since 2016 — so we are starting from a position of strength. We have issued white papers, launched digital asset pilots, and promoted industry knowledge-sharing and collaboration, which has helped pressure test the use of distributed ledger technology (DLT). Our focus now is on building upon that strong foundation.
Since the transaction, I have noticed a strong buzz in the air here at DTCC and across the industry. Colleagues are extremely interested in the technology, and they are excited by the opportunity to provide leadership globally on these issues. We are feeding that interest by providing ongoing education to our teams and empowering them to harness the power of blockchain.
What sets DTCC Digital Assets apart from other digital asset firms?
DTCC Digital Assets is a leading developer of institutional-grade, digital asset infrastructure. We offer solutions to facilitate the trading, settlement and servicing of digital securities and assets. Given our infrastructure is based on a foundation of compliance-aware technology, we are confident that our capabilities will drive institutional adoption of blockchain technology, including tokenisation and financial process automation, near-real time payment and post-trade settlement, and cross-chain interoperability.
While the benefits of this technology are truly transformative, and we have seen some notable wins from banks and start-ups with their own blockchain and tokenisation pilots, the reality is that this work is occurring in siloes. This ‘walled garden’ approach to innovation is holding the industry back from progress.
What differentiates DTCC Digital Assets is that we have the people, technology, reputation, relationships and trust to galvanise the industry and drive progress.
What work are you currently focusing on, and how will it help to drive digital asset adoption in financial markets?
Our primary focus right now is on industry engagement and dialogue as we prepare to roll out our solutions. There is interest across a wide spectrum of market participants to understand how tokenisation can deliver significant operational, liquidity and risk mitigation benefits. One of the most common things I hear from firms is that they require support connecting their traditional systems with digital ones.
The path to building a robust digital ecosystem starts with collaboration. By working together, we can all play in the same sandbox, allowing experiments to co-exist, interoperate and build upon each other incrementally. At DTCC, we have a DLT ecosystem to support collaborative experimentation, and we are excited to launch Composer as our first capability later this year. This will represent an important milestone because it will allow for the creation and composability of smart contracts, which can unlock automation benefits.
Collaborative innovation is also a major theme that is reflected in our ongoing work with Euroclear and Clearstream. As three of the world’s largest financial market infrastructures, we released a white paper last year on the state of the industry’s digital asset evolution. In it, we called for greater collaboration to advance the adoption of digital assets. As promised, we are now working on a follow-up, which will be released this quarter, to turn our words into action. The new paper will include a detailed framework for standards and best practices, which we will promote to guide the industry in the months and years ahead.
As part of this work, we are also committed to supporting the development of a legal and regulatory framework, as well as ways to harmonise fragmented data standards that exist across traditional and digital markets — including different definitions and structures for data. These represent significant opportunities for broader adoption.
As Global head of DTCC Digital Assets, what key trends do you see shaping the future of the industry?
The most important trend is that, after years of experimentation with digital assets, the walled gardens are beginning to crack.
Our industry is coming to realise that blockchain is not a go-it-alone technology. For all of us to be successful, collaboration is key. However, our industry has lacked a convening force to date — an organisation that can galvanise the widest range of market participants to lead innovation. That is also about to change, because DTCC will play a global role in unlocking the power of digital assets.
I am also seeing growing institutional interest in, and enthusiasm for, digital asset technology, particularly among issuers. We have been speaking to a lot of firms about the benefits of tokenising money market funds and collateral management processes. They recognise the value of increasing the velocity of these processes. For example, tokenising collateral would allow it to be exchanged in real-time, reducing risk and boosting capital efficiency.
Another trend is firms exploring how blockchain can create new revenue sources and open up new markets. So far, we have seen some success in the retail space, particularly from companies that are creative and can demonstrate how tokenisation can reshape business models. Take WisdomTree for example. The company has made real-world assets available in token form on a mobile app, which gave them access to new clientele — the Millennial and Gen Z users who tend to prefer the mobile banking experience.
How will the intersection between traditional finance and digital assets evolve in the coming years?
We have approached an inflection point as an industry. Firms seem ready to come together in meaningful ways, but there is a lot of work that needs to be done. Right now, there are many tokenisation and blockchain providers. I believe we are still one or two generations away before we can distil and simplify things — with the foundation and infrastructure that will serve as the building blocks for this ecosystem to continue to grow and develop over the coming years.
I want to stress that education will also play a key role. For instance, there is still a misunderstanding that blockchain is another name for cryptocurrency, instead of the innovative technology behind it. That is why we are devoting so much time to helping firms better understand the technology and how it can reshape their business models.
As industry-wide knowledge of tokenisation deepens, I am finding that market participants are getting excited about the possibilities it offers. There is a lot of enthusiasm when I explain how technology can enable transactions to settle faster and at a lower cost than traditional methods, that smart contracts can allow automated execution of financial settlements, and how blockchain provides secure and transparent record of ownership and transactions. In addition, there is always interest when the conversation turns to the accessibility benefits and how digital technologies will foster the creation of asset classes and new investment opportunities.
Put simply, blockchain and tokenisation can dramatically reshape the financial ecosystem and transform how markets operate. However, innovation takes time; it can be messy and the path forward is not always a straight line. That is both the opportunity and challenge before us.
At DTCC, we plan to continue to lead the conversation, work closely with regulators, and drive positive change. We are making good progress, and we are excited for the road ahead.
