Depository Trust & Clearing Corporation (DTCC) has just released an in-depth 43-page report on blockchain, emphasizing that fragmentation risks among distributed ledger technology (DLT) networks could hinder the scaling and adoption of digital assets within the decentralized finance (DeFi) ecosystem.
The report is co-authored by DTCC, Clearstream, and Euroclear, with consulting from Boston Consulting Group. It calls for increased data standardization, process harmonization, and clear role delineation among participants to avoid fragmentation in the still-nascent DLT space.
According to the authors, interoperability is a key factor in unlocking the full potential of digital securities, helping to simplify use cases, unlock new business models, and maintain liquidity, security, and transferability of assets.
The report is designed as a “neutral reference document” amid the growing application of blockchain in traditional financial systems. Tokenization—the process of bringing real-world assets onto the blockchain—along with stablecoins, is attracting significant attention. Last year, DTCC’s subsidiary, The Depository Trust Company, received a “no-action” letter from the U.S. Securities and Exchange Commission, allowing it to provide tokenization services for custodial assets.
However, DTCC warns that fragmentation among emerging DLT networks is becoming one of the biggest barriers to scaling. Without interoperability, assets risk becoming “stuck” within isolated ecosystems, operational costs remain high, and operational and regulatory compliance risks continue to grow.
To address this challenge, the report references long-standing standardization efforts in traditional finance (TradFi), including SWIFT’s messaging system and the International Securities Identification Number (ISIN). The authors identify five foundational areas that need standardization: assets and liabilities, ownership rights, asset lifecycle and transfer processes, ledgers, and legal and compliance frameworks.
According to Nadine Chakar, DTCC’s Managing Director of Digital Asset Strategy, interoperability is fundamental to scaling and adopting digital assets broadly. She emphasizes that participants should focus on data standards, common protocols, and robust risk governance to build bridges between TradFi and DeFi based on transparency, security, and trust.
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