DTCC and Chainlink lead innovation in fund tokenization with support from financial giants

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Depository Trust & Clearing Corporation (DTCC), known as the largest global securities settlement system, announced the completion of a significant pilot project in collaboration with Chainlink, an oracle platform for blockchains. This pioneering project, named Smart NAV, involved the participation of major financial institutions, including JPMorgan, Franklin Templeton, and BNY Mellon, with the aim of promoting the tokenization of assets.

The Smart NAV pilot aimed to create a standardized method for integrating and distributing fund net asset value (NAV) data across multiple blockchains, whether private or public. For this purpose, Chainlink’s CCIP interoperability protocol was used. The list of participants was impressive, ranging from American Century Investments to US Bank, MFS Investment Management, and State Street.

The completion of the pilot project provided valuable insights. DTCC reported that “by making structured data available on-chain and establishing standard processes and functions, it was possible to include essential information in a diverse range of blockchain applications.” This includes tokenized assets and smart contracts tailored for mass consumption, which can incorporate data from multiple funds into a single contract.

This advancement comes at a time when the tokenization of real-world assets like bonds and investment funds is becoming increasingly popular as one of the most promising uses of blockchain technology. Institutions such as BlackRock, Citi, and HSBC have also explored this area, seeking benefits such as operational efficiency, faster settlements, and improved transparency compared to traditional financial management methods.

This pilot represents a significant milestone in the integration between conventional finance and new blockchain technologies, enhancing innovations in fund management and trading on a global scale.

In a white paper published Wednesday, the New York-based post-trade financial services firm said participants in the financial sector should work to establish a set of “agreed-upon standards” that could address some of the security concerns surrounding the tech.

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