Building on the partnership formed last year to tackle the future of digital assets together, the Depositary Trust and Clearing Corporation (DTCC), Clearstream and Euroclear have published a whitepaper to establish a set of risk management controls and guidelines for the future development of the technology.
The principles, named the Digital Asset Securities Control Principles (DASCP), are intended to serve as a guide for firms navigating the challenges posed by distributed ledger technology (DLT).
The DASCP framework covers various value chain activities, including issuance, clearing, settlement, custody, and asset servicing. The guidelines currently exclude secondary trading activities.
Designed to be asset class and technology-neutral, the DASCP does not advocate for any particular DLT architecture – be it public, private, permissioned, or public permissioned. The report stated that this ensures its applicability across various DLT platforms without endorsing specific third-party solutions.
In a joint letter, the CEOs of the three organisations said: “Ultimately, we believe that industry collaboration is not only the most expedient way but also the most effective way to build a robust global digital assets ecosystem. We invite you to join us in this exciting journey that has the potential to redefine global finance, ensuring that this digital transformation benefits the ecosystem and contributes to sustainable economic growth.”
The trio said this whitepaper marks the beginning of a more expansive programme, with the DASCP serving as a baseline for propelling the industry towards digital asset standards. Over 20 market participants participated in testing the DASCP, while all industry stakeholders have been invited to engage with and help evolve the framework moving forward.
The letter continued: “The DASCP marks the starting point of further industrywide engagement to enable standardisation, drive adoption and unlock value. To achieve these goals, we intend to put these principles into action. By leveraging them in our digital asset activities, we will effectively demonstrate to clients, regulators, and the broader industry that digital asset securities can be just as safe and secure as traditional assets.”
The whitepaper outlined three strategic priorities for establishing industry standards: forging a common language, enabling regulatory clarity, and providing a blueprint from industry-wide alignment.
A series of in-depth discussions involving market participants will now follow the whitepaper, with a view to fostering open dialogue and collective intelligence – addressing the concerns and challenges faced by the industry in implementing the control principles.
“Integrating these principles into future standards will be vital for enhancing security, efficiency, and promoting broad-based innovation within the industry,” the report said. “We are committed to not just working together but to moving forward with a purpose. This is a call for industry-wide mobilisation to support a vision. Let us unite in this endeavour to build a robust, integrated financial future. Together, we can advance the era of digital asset securities.”
The whitepaper comes as the development of digital asset and tokenised solutions is really beginning to pick up pace in the industry. While widespread adoption may still be a long way off, participants from across the market are establishing dedicated units and testing potential use cases for the technology.
The concern, however, is that innovation is taking place in silos, therefore the industry is looking to initiatives and market infrastructure providers – orutilities – to solve for this issue through standards and interoperability endeavours.
For the market infrastructures themselves, questions have arisen around their role in a digital future – whereby new technologies have the potential to cut out parts of their role – and they are therefore looking to evolve and establish their place in the securities industry of the years to come.