Casey Wagner

Ben Strack

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<h2 class="wp-block-heading">Harris punts on crypto talking points, again&nbsp;</h2>



Hours after pledging to support Black men’s rights to safely invest in crypto, Vice President Kamala Harris’s Monday night speech fell short on delivering details.&nbsp;



Harris’s “<a href="https://www.theguardian.com/us-news/2024/oct/14/harris-black-men-economic-opportunities-plan-weed-crypto">Opportunity Agenda for Black Men</a>” debuted Monday morning. The policy proposal emphasizes how the administration will elevate the Black male community by giving them tools to “build wealth, support their families and lead their communities.”&nbsp;



One of these wealth-building tools? Give Black men the opportunity to “benefit from financial innovation” — namely, crypto.&nbsp;



Specifically, the agenda states Harris is committed to “supporting a regulatory framework for cryptocurrency and other digital assets so Black men who invest in and own these assets are protected.”



The proposal was published ahead of Harris’s planned rally in Erie, PA last night. More on that soon. First, let’s talk about the response.&nbsp;



<a href="https://x.com/ShevrinJones/status/1845806476062806375">Many</a> praised the initiative as a welcome effort to elevate a marginalized community. <a href="https://www.theblock.co/post/320930/vice-president-kamala-harris-vows-to-support-a-crypto-regulatory-framework-in-plan-to-support-black-men">Others</a> criticized the language in the agenda, saying it’s frustrating that Harris’s administration sees Black men in crypto solely as investors (as opposed to leaders and builders).&nbsp;



The agenda itself mentions crypto twice. The first time was quoted above.&nbsp;



Here’s the second: “More than 20% of Black Americans own or have owned cryptocurrency assets. Vice President Harris appreciates the ways in which new technologies can broaden access to banking and financial services.”&nbsp;



It’s similar to the limited statements we’ve heard from Harris on crypto in the past — decidedly not negative, but perhaps too vague to be truly positive. Last month the presidential hopeful mentioned blockchain/digital assets twice; once at a fundraising event in New York where she said she’d “<a href="https://blockworks.co/news/empire-newsletter-silvergate-collapse">encourage</a>” new technologies like crypto, and a second time during a speech in Pennsylvania, where she said the US will “remain dominant” in blockchain technology.&nbsp;



But last night’s appearance in PA left those hoping for more crypto-focused comments disappointed. She mentioned blockchain a total of zero times.&nbsp;



Still, maybe beggars can’t be choosers? Are limited, unclear remarks better than nothing? Galaxy Research’s Alex Thorn <a href="https://x.com/intangiblecoins/status/1845845163588907486">argues</a> that Harris’s (relative) clarity is at least better than the current administration’s. In Galaxy’s “policy scorecard” released Monday, analysts say Harris is, on several issues, “somewhat supportive” and “slightly better than Biden.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">TRIGGER ALERT 🚨 i’m releasing our policy scorecard on the positions of biden, harris, and trump on major bitcoin &amp; crypto issues bottom line: while trump is undoubtedly more favorable for the industry, we’re optimistic that harris could be more supportive than biden has been <a href="https://t.co/qNKeLtppcS">pic.twitter.com/qNKeLtppcS</a>&mdash; Alex Thorn (@intangiblecoins) <a href="https://twitter.com/intangiblecoins/status/1845845163588907486?ref_src=twsrc%5Etfw">October 14, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



These issues include the industry’s relationship with the SEC, Harris’s approach to bitcoin mining regulations and her stance on banking laws.&nbsp;



Specifically, Thorn said, Harris has hinted that she’s interested in easing the so-called “<a href="https://blockworks.co/news/operation-choke-point-2-0">Operation Chokepoint 2.0</a>” policy that has sought to isolate crypto players from the banking system. But these ratings are based on a very limited sample pool; we just don’t have a lot to go off of when trying to evaluate Harris.&nbsp;



Trump, compared to Harris, has given the public more definitive stances on crypto. He wants to fire Gary Gensler. He wants to make the US a bitcoin mining <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-bitcoin-mining-meeting">hub</a>. He wants to stop the US government from <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">selling seized bitcoin</a>.&nbsp;



When it comes down to it, though, we don’t have a comprehensive policy proposal on digital assets from either candidate. All we can do is analyze what they have said and look to the members of their respective teams to try and glean an opinion. But time is running out.&nbsp;



— Casey Wagner&nbsp;



<h3 class="wp-block-heading">~2,900&nbsp;</h3>



The number of people that purchased a combined 344 million World Liberty Financial tokens after the <a href="https://blockworks.co/news/0xresearch-newsletter-trump-world-liberty-financial-aave">Trump-backed</a> project went live this morning, onchain <a href="https://etherscan.io/token/0xda5e1988097297dcdc1f90d4dfe7909e847cbef6#balances">data</a> shows.&nbsp;



The project has allocated 20 billion of its 100 billion total tokens for public sale. The sale was open to accredited investors in the US. <a href="https://blockworks.co/news/world-liberty-financial-kyc-starts">KYC efforts</a> for WIFL began two weeks ago.&nbsp;



<h2 class="wp-block-heading">DTCC again swoops into tokenization segment at ‘inflection point’</h2>



It was almost a year ago exactly that the Depository Trust &amp; Clearing Corporation (DTCC) <a href="https://blockworks.co/news/defi-acquisition-dtcc-securrency">revealed its buy</a> of blockchain-based financial and regulatory tech developer Securrency.



Now, the financial market infrastructure giant has introduced a so-called sandbox to “clear the path to scalable adoption of digital assets.”



For those who don’t know, the DTCC (per its website), processes trillions of dollars in securities transactions daily.



Dubbed DTCC Digital Launchpad, the new offering seeks to connect tech providers and others to collaborate on “pilots that have a clear path to production.”



The Japan Securities Clearing Corporation (JSCC) led a <a href="https://www.dtcc.com/-/media/WhitePapers/Transforming-Collateral-Management-With-Digital-Assets-JSCC.pdf">proof-of-concept</a> on the platform to explore how central counterparties could use tokenization within the collateral management process for clearing members and their buy-side firms. It paid special attention to how margin calls could be automated — boosting efficiency and transparency using digital assets and smart contracts.



Ultimately, JSCC used DTCC’s blockchain-based infrastructure to issue digital assets such as cash, stocks and bonds, JSCC CEO Konuma Yasuyuki noted in a statement.



Last year’s Securrency deal was meant to allow DTCC to quicken the development of a platform designed to “unlock the power of institutional DeFi,” the <a href="https://blockworks.co/news/dtcc-acquisition-tradfi-crypto">company said</a> at the time.



Elliot Chun, a partner at advisory firm Architect Partners, wrote in a research note last year that tokenization had not yet lived up to its promise.



“The fundamental way to move the industry forward is by having a critically important market participant make a significant investment in technology,” Chun said in that October 2023 post. “You can’t get more critical than DTCC.”



DTCC’s release points to the <a href="https://www.gfma.org/policies-resources/gfma-publishes-report-on-impact-of-dlt-in-global-capital-markets/#:~:text=The%20report%20finds%20that%20DLT,at%20scale%20(e.g.%2C%20approximately%20%2416">projection</a> that $16 trillion worth of tokenized securities could live on digital rails by 2030. Standard Chartered expects the tokenized real-world asset market to hit $30 trillion by 2034.



We’ve seen plenty of tokenization efforts take place in recent months — from TradFi players’ test of a <a href="https://blockworks.co/news/tradfi-blockchain-trials-mass-adoption">Regulated Settlement Network</a> to Visa’s tokenized asset platform <a href="https://blockworks.co/news/visa-to-help-banks-test-tokenized-assets-smart-contracts">sandbox launch</a>.



And yet adoption of this technology has seemed to stall, argues DTCC digital assets head Nadine Chakar. The industry is indeed at “an <a href="https://blockworks.co/news/on-the-margin-newsletter-tokenization-trend">inflection point</a>,” the executive told Blockworks Tuesday.&nbsp;



“Innovation is an evolving process; if we continue developing in silos, we risk repeating the mistakes of the past and creating more fragmentation in markets,” Chakar noted. “We believe DTCC can play a critical role in developing this ecosystem, building a common infrastructure by encouraging industry collaboration around standards, data, liquidity and infrastructure.”



It may take a little while to know the impact of this new DTCC offering (with pilots and participants expected to be publicized in Q1 2025), but it’ll be worth paying attention to.&nbsp;&nbsp;



— Ben Strack&nbsp;



<h2 class="wp-block-heading">Coinbase exec weighs the presidential hopefuls</h2>



You just read Casey’s breakdown of the VP’s latest comments, and we are officially three weeks away from Election Day.&nbsp;&nbsp;



The results on Nov. 5 will matter a lot, Coinbase Chief Policy Officer Faryar Shirzad told me at <a href="https://blockworks.co/tag/permissionless">Permissionless</a> last week. But he also urged the industry to not lose sight of the progress made so far.&nbsp;



“It’s hard for me not to conclude that we’ve already had an extraordinarily successful election year, and whatever happens on Election Day will be just additive to the success we’ve already had by putting ourselves on the main political stage,” Shirzad noted.



Donald Trump “deserves enormous credit for what he’s said on the crypto issues and how comprehensive his vision has been,” the executive added.&nbsp;



In particular, Shirzad lauded Trump’s vows to support crypto businesses being built in the US and to push against regulators abusing their powers against an industry.&nbsp;&nbsp;



But more than that, what caught the Coinbase exec’s ear was Trump’s words about <a href="https://blockworks.co/news/0xresearch-newsletter-self-custody-developments">defending the right</a> to self-custody crypto.&nbsp;



“My interpretation of what he means is that he’s protecting the DeFi ecosystem and the ability of individuals…to control [their wallet] and have all the Fourth Amendment protections and privileges that one should be entitled to,” Shirzad said. “I think that was a huge, huge policy victory, and I think it is the kind of thing we hope the Democrats will embrace at some point as well,” he said.



Harris deserves some credit too for the efforts she’s made to converse with the crypto community and her seeming intention to be more constructive on the issue, Shirzad noted.



Outreach sessions with members of Harris’s campaign have had a “positive” tone, Shirzad said — adding that her advisers are “eager to hear what we think the issues are and understand it better.”



“There’s reason to feel optimism on both sides,” Shirzad explained. “But at the end of the day, more substance and more detail are critical, and we’re hoping to get more from the vice president between now and Election Day.”



It seems that for some, Harris’s comments last night fell a bit short on the details. Whether she or Trump speak more about crypto over the next 21 days (and how into the weeds they choose to go) is anyone’s guess.&nbsp;



— Ben Strack



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>Canary Capital on Tuesday filed an <a href="https://www.sec.gov/Archives/edgar/data/2039461/000199937124013330/litecoin-s1_101524.htm">S-1</a> with the SEC <a href="https://blockworks.co/news/canary-capital-litecoin-etf">for a litecoin ETF</a>. The filing comes after the firm last week took a page from <a href="https://blockworks.co/news/xrp-etf-contingent-on-election-and-sec-appeal">Bitwise’s book</a> and threw its hat in the XRP ETF ring. These products need SEC approval before being allowed to launch.  </li>



<li>CFTC-regulated Bitnomial revealed plans to launch a US perpetual futures trading <a href="https://botanical.finance/">platform</a>. The product announcement follows Bitnomial’s $25 million Series C raise, which closed over the summer. </li>



<li>Coinbase on Tuesday filed a <a href="https://assets.ctfassets.net/sygt3q11s4a9/6ege1NgjUEFUVKHLbiOJoc/1c2cae114ae49f156b21b1f4262b6111/HAI_v._SEC_-_Pre-Motion_Notice__as-filed_.pdf">motion</a> in its joint case (with consultancy firm History Associates Incorporated) against the SEC. The case, which Coinbase <a href="https://blockworks.co/news/coinbase-lawsuit-sec-fdic-foia-dispute">brought in June</a>, deals with the SEC’s alleged violations of the Freedom of Information Act. Coinbase is now asking the court to schedule a hearing to discuss the exchange&#8217;s request for a partial summary judgment.</li>



<li>US spot bitcoin ETFs notched $556 million of <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">net inflows</a> on Monday, <a href="https://blockworks.co/news/btc-uptober-price-gains">as BTC rallied</a>. It was the segment’s highest inflow total in a single day since June 4.  </li>
</ul>



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VP Harris’s latest crypto comments fall short on details

Though crypto mergers and acquisitions slowed in 2023, some industry watchers say such transactions are likely to be more en vogue next year as the space continues to mature.



There were 203 crypto M&amp;A deals in 2022. Such deal count this year stood at 143 on Dec. 13, according to advisory firm Architect Partners — on pace to decline by 27% year over year.



Nearly a third of the 2023 transactions — 42 in all — have come within the investing and trading infrastructure category, the data shows. This comprises non-exchange trading firms, custodians and other companies focused on “infrastructure to the trading lifecycle,” said Architect Partners founder Eric Risley.&nbsp;



<h2 class="wp-block-heading">Which deals were among the most notable?</h2>



Among the most notable M&amp;A deals was <a href="https://blockworks.co/news/ripple-acquires-metaco">Ripple’s acquisition of crypto custody firm Metaco</a> for $250 million in May.



Ripple is perhaps best known for establishing one of the earliest blockchain-based payment networks. For the company, securely managing digital assets is crucial. Switzerland-based Metaco provides custody infrastructure to banks, fintechs, exchanges and corporations.



Ripple CEO Brad Garlinghouse called custody “a key facet of the infrastructure required for enterprise crypto services” at the time. Sagar Shah, Ripple’s head of custody, had told Blockworks the firm spent two years evaluating crypto custodians, highlighting Metaco’s “first-rate bank customers,” and “crypto native team.”



Another major deal was <a href="https://blockworks.co/news/coinbase-one-river-acquisition">Coinbase’s acquisition of One River Digital Asset Management</a> in March for roughly $97 million. It was the exchange’s first buy since closing a <a href="https://blockworks.co/news/coinbase-acquires-regulated-futures-exchange-to-expand-derivatives-offerings">$275 million deal for derivatives exchange FairX</a> in February 2022.



The crypto exchange said in a <a href="https://www.coinbase.com/blog/coinbase-has-acquired-one-river-digital-asset-management">blog</a> post at the time the acquired firm would allow it to offer investment advisory services to institutional clients.



Read more: <a href="https://blockworks.co/news/record-q1-crypto-ma">Three deals ‘emblematic’ of market during record Q1 for crypto M&amp;A</a>



Coinbase&#8217;s acquisition came as the company intensified the push to expand its product set and geographical footprint. The firm&#8217;s revenue from subscriptions and services, derived from sources like stablecoins, custodial fees, blockchain rewards and interest income, surpassed its earnings from transactions in the third quarter.



Alyssa Choo, crypto equities specialist at Bitwise, previously argued that <a href="https://blockworks.co/news/coinbase-q3-earnings-analysis">the exchange’s future is as “a crypto super app”</a> with a variety of revenue streams.



“Coinbase recognizes that crypto asset investors are rapidly shifting from crypto-native speculators to more sophisticated, long-term investors,” Risley said. “Investors demand more sophisticated investment strategies, indexes, investment products and advice.”



In the mining space, Hut 8 and US Bitcoin Corp. <a href="https://blockworks.co/news/new-look-hut-8-eyes-ai-related-opportunities-after-merger">closed what was billed as “a merger of equals”</a> earlier this month. The combined company enjoys more geographic diversity and business lines, <a href="https://blockworks.co/news/hut8-merger-usbtc-closing-soon">segment observers said</a>, helping its standing ahead of <a href="https://blockworks.co/news/anniversary-of-2016-btc-halving">the upcoming bitcoin halving.</a>&nbsp;



<h2 class="wp-block-heading">Tokenization efforts show up in 2023 deals</h2>



The Depository Trust and Clearing Corporation (DTCC) bought Securrency, a blockchain-based financial and regulatory technology developer.&nbsp;



DTCC, a financial market infrastructure behemoth that processes trillions of dollars in securities transactions daily, <a href="https://blockworks.co/news/defi-acquisition-dtcc-securrency">revealed the $50 million deal in October</a> and <a href="https://blockworks.co/news/dtcc-acquisition-tradfi-crypto">closed it this month</a>.&nbsp;



It marks one of the latest examples of traditional finance and crypto converging, a trend that has reared its head in recent months in the form of tokenization.&nbsp;



Read more: <a href="https://blockworks.co/news/real-world-assets-tradfi-defi-tokenization">TradFi, DeFi convergence continues through tokenizing real-world assets</a>



“In its first acquisition in a decade, DTCC is anticipating and embracing the digitization of traditional assets of all types, the use of blockchain-based transaction settlement, and acting as a regulatory-compliant bridge between traditional securities and emerging digital asset marketplaces,” Risley told Blockworks.



Other tokenization-related deals include <a href="https://blockworks.co/news/securitize-ria-market-tokenization-growth">Securitize’s buy of Onramp Invest</a>.&nbsp;



The acquired digital asset wealth platform works with US registered investment advisers (RIAs). The purchase allows Securitize to offer tokenized alternatives — like private equity and private credit — through systems RIAs are accustomed to using, the company said at the time.



Digital asset infrastructure platform Fireblocks also looked to expand its <a href="https://blockworks.co/tag/tokenization">tokenization</a> abilities by acquiring smart contract firm BlockFold.&nbsp;



Fireblocks CEO Michael Shaulov said in a statement that BlockFold’s expertise will help it assist big financial institutions to quickly launch tokenization projects.&nbsp;



In a transaction reflecting the convergence of traditional finance and blockchain more broadly, German capital market giant Deutsche Borse bought digitized fund distribution platform FundsDLT.&nbsp;



“Distribution of financial products is critical for primary issuance and secondary markets, and FundsDLT streamlines and automates processes leading to increased distribution with reduced costs and time,” Risley said. “Similar [distributed ledger technology] infrastructure will be implemented in nearly every financial product.”



<h2 class="wp-block-heading">What to expect in 2024</h2>



Samuel Dibble, a partner at Baker Botts, noted that milestone events in 2023 are likely to lead to greater crypto market maturity, which could in turn spur a greater number of mergers in acquisitions next year.



A US federal judge in July <a href="https://blockworks.co/news/judge-rules-ripple-xrp-not-security">partially sided with Ripple Labs</a> in a US Securities and Exchange Commission lawsuit alleging its XRP token constituted an unregistered security offering.



The SEC <a href="https://blockworks.co/news/coinbase-binance-suits-different">sued crypto exchanges Coinbase and Binance</a> earlier this year, accusing each of operating as unregistered securities exchanges. The US Department of Justice last month revealed a series of actions against Binance, including $4.3 billion in fines and forfeitures.&nbsp;



The two exchanges <a href="https://blockworks.co/news/coinbase-will-rechallenge-sec">remain in legal battles with the SEC</a>.&nbsp;



Read more: <a href="https://blockworks.co/news/binance-refutes-sec-filing">Binance says the SEC can’t use DOJ plea deals as proof of guilt</a>



“When the regulatory air clears on whether digital assets are securities, commodities or something else outside of existing regulatory regimes, I’d look for the larger, more diversified financial institutions to start acquiring the larger crypto players — or at least their key assets,” Dibble told Blockworks.&nbsp;&nbsp;



Additionally, the sale of assets belonging to bankrupt exchange FTX — including companies owned or acquired by the company prior to its collapse — was “eye opening,” Dibble added. FTX, for example, agreed in April to sell crypto derivatives platform LedgerX for $50 million, Reuters <a href="https://www.reuters.com/technology/ftx-debtors-sell-futures-options-clearinghouse-unit-ledgerx-2023-04-25/">reported</a>.



There is still plenty of demand for digital assets, Dibble noted. <a href="https://blockworks.co/news/blackrock-spot-bitcoin-etf-rumors">BlackRock CEO Larry Fink called crypto “flight-to-quality” assets</a> for some investors.&nbsp;



Financial institutions, eager to serve their existing clients and attract new ones interested in balancing crypto-heavy portfolios with more conventional financial assets, are likely to seek opportunities in providing cryptocurrency services, Dibble told Blockworks.&nbsp;



“For those reasons, I think there will be more deal-making in the headlines in 2024 than there was in 2023,” he said.



Many crypto companies — particularly those tied to trading volumes and crypto prices — have improving fundamentals moving into 2024, Risley said.



Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>) are up roughly 155% and 85%, respectively, year to date.



The Architect Partners founder added: “This thaw likely gradually opens the aperture for management teams to regain comfort with executing on strategic initiatives via mergers and acquisitions.”



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The year’s most significant crypto M&A deals — and how 2024 might shape up

The Depository Trust and Clearing Corporation (DTCC) closed its deal on Monday to acquire Securrency as traditional finance-crypto integrations continue to emerge.&nbsp;



The purchase was first announced in October. It is part of a bid to help accelerate the expected greater institutional use of on-chain assets amid an industry-wide tokenization push.



DTCC CEO Frank La Salla said in a Monday statement that the firm seeks to build “a robust digital infrastructure that protects the safety and soundness of financial markets and delivers on the enormous promise and potential of institutional DeFi in the coming years.”



Read more: <a href="https://blockworks.co/news/defi-acquisition-dtcc-securrency">DTCC tees up institutional DeFi push with Securrency buy</a>



The financial market infrastructure giant offers clearing and settlement services — processing trillions of dollars in securities transactions daily, as stated on its website. Securrency is a blockchain-based financial and regulatory technology developer.&nbsp;



The acquisition — made for $50 million — formalizes DTCC’s current blockchain pilot efforts and is expected to deliver an institutional post-trade platform that supports most digital asset products, according to Elliot Chun, a partner at advisory firm Architect Partners. This includes existing securities wrapped in on-chain assets, he added.



“DTCC has been forward-thinking in its use of blockchain, and the cost and operational efficiencies are well-suited for DTCC to impact the entire securities industry,” Chun noted in an October research <a href="https://architectpartners.com/dtcc-acquires-securrency/">note</a>.&nbsp;



The acquiring firm — renamed as DTCC Digital Assets — is set to be led by Nadine Chakar. The executive <a href="https://blockworks.co/news/ex-state-street-digital-head-to-lead-regtech-blockchain-startup">joined the firm from State Street</a> in January.



A <a href="https://blockworks.co/tag/dtcc">DTCC</a> spokesperson did not immediately comment on the combined firm’s next steps.&nbsp;



Securrency has been in the thick of tokenization efforts seen in recent years as traditional finance giants have looked for ways to get more involved in the blockchain and crypto segments.&nbsp;



Chakar said in January the financial services industry was at “a critical tipping point as it <a href="https://blockworks.co/news/real-world-assets-tradfi-defi-tokenization">tokenizes regulated real-world assets</a> and automates legacy financial processes using the power of blockchain technology.”



Total value locked (TVL) in protocols that involve real-world assets is at nearly $5.8 billion, according to DefiLlama <a href="https://defillama.com/categories">data</a>.&nbsp;



Read more: <a href="https://blockworks.co/news/brazil-drives-tradfi-crypto-convergence">How a Brazilian banking giant’s latest move reflects the ongoing TradFi-crypto convergence</a>



Securrency helped asset manager WisdomTree <a href="https://blockworks.co/news/wisdomtrees-latest-blockchain-enabled-funds-to-use-ethereum-stellar">launch “blockchain-enabled” funds</a> that keep a secondary record of share ownership on the Stellar or Ethereum blockchains. DTCC said in an October news release it would license Securrency’s technology to firms — similar to how WisdomTree uses Securrency’s software as infrastructure for <a href="https://blockworks.co/news/wisdomtree-prime-app-new-features-blockchain-enabled">its consumer app that offers tokenized assets and funds</a> through digital wallets.



JPMorgan has explored various tokenization and blockchain initiatives for several years — recently <a href="https://blockworks.co/news/blackrock-barclays-jpmorgan-chase-dapp-tcn">facilitating a collateral transaction between BlackRock and Barclays</a> via a decentralized application.



Germany-based Deutsche Bank said in September it was <a href="https://blockworks.co/news/deutsche-bank-crypto-custody-tokenization">set to establish digital asset custody and tokenization services</a> through a partnership with crypto infrastructure firm Taurus.



“Tokenization has not lived up to its promise yet, and the fundamental way to move the industry forward is by having a critically important market participant make a significant investment in technology,” Chun said in his October post. “You can’t get more critical than DTCC.”&nbsp;&nbsp;



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



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DTCC closes deal to buy Securrency amid TradFi-crypto integrations

The listing of BlackRock’s proposed bitcoin ETF on the Depository Trust and Clearing Corporation website appeared to fuel more optimism that approval of such funds is imminent.



But the inclusion of ETFs that have not yet gained regulatory approval is nothing out of the ordinary, according to DTCC, which processes trillions of dollars in securities transactions daily.&nbsp;



Bloomberg Intelligence analysts, and others, <a href="https://blockworks.co/news/blackrock-ishares-bitcoin-etf">pointed out in X posts Monday</a> the iShares Bitcoin Trust (IBTC) — <a href="https://blockworks.co/news/blackrock-clout-bitcoin-etf-approval">first proposed to the Securities and Exchange Commission in June</a> — was on the DTCC list. This spurred speculation from some that the planned fund’s launch was imminent.



But it is “standard practice” for DTCC to add securities to its “eligibility file” in preparation for new potential ETF launches, a spokesperson for the financial market infrastructure giant told Blockworks late Tuesday.



The names in the <a href="https://www.dtcc.com/products/cs/exchange_traded_funds_plain_new.php">file</a> — kept by DTCC subsidiary National Securities Clearing Corporation (NSCC) — include active and potential ETF securities. The proposed BlackRock offering was first added to the list in August, according to DTCC.&nbsp;



“Appearing on the list is simply an indication that an agent bank has requested a DTCC identifier for an ETF fund, and that DTCC may process that transaction at an undetermined date in the future following SEC approval,” the DTCC representative said in an email.



The proposed fund’s inclusion on the list is “not indicative of an outcome for any outstanding regulatory or other approval processes in respect of a particular ETF fund,” they added.



IBTC<a href="https://blockworks.co/news/blackrock-ibtc-bitcoin-etf"> disappeared from the list briefly</a> Tuesday before <a href="https://blockworks.co/news/blackrock-ibtc-dtcc-etf">showing up again later on</a> — a change the DTCC spokesperson declined to comment on.



BlackRock has declined to comment on the listing.&nbsp;



The SEC has never permitted a spot bitcoin ETF to begin trading, blocking attempts from issuers that span back a decade.&nbsp;



Bitcoin was above $34,000 Wednesday morning — up roughly 20% from a week ago — amid optimism that bitcoin ETFs could start trading in the coming months.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/spot-bitcoin-etf-optimism">Another would-be bitcoin ETF player: ‘It’s going to get approved’</a>



Fund issuers in recent weeks have been updating bitcoin ETF applications, which industry watchers say signals ongoing dialogue with the SEC.



Grayscale Investments said Monday the firm intends “to move as expeditiously as possible” to convert its Bitcoin Trust (GBTC) to an ETF after <a href="https://blockworks.co/news/grayscale-sec-gbtc-etf">the court formalized its legal victory</a> over the SEC that day.



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DTCC: Listing of planned BlackRock bitcoin ETF ‘not indicative’ of approval

Katherine Ross

BlackRock’s proposed iShares Bitcoin ETF, with the ticker IBTC, is back on the Depository Trust and Clearing Corporation website after vanishing early Tuesday.



IBTC originally appeared on the DTCC website on Monday, sending bitcoin rallying. Late Monday, bitcoin briefly topped $35,000 before falling back around $33,000.



Eagle-eyed crypto investors, eager for nibbles of news around the spot bitcoin ETFs, first noticed the listing. Bloomberg analyst Eric Balchunas commented on X, saying that BlackRock&#8217;s listing was “notable” due to BlackRock not only being the first to list on DTCC, but also leading “the charge on these logistics (seeder, ticker, dtcc).”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Note: Seeding is typically not a lot of money just enough to get ETF going. So I wouldn&#39;t read this as &#39;omg Blackrock is buying a ton of bitcoin&#39; at all but more the fact they doing it and disclosing it shows another step in the process of launching.&mdash; Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1716491230316486872?ref_src=twsrc%5Etfw">October 23, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Read more: <a href="https://blockworks.co/news/cme-investors-spot-bitcoin-etf">Investors ‘abuzz with anticipation’ for spot bitcoin ETF approval: CME</a>



Normally, these steps are taken right before launch, he said.



After<a href="https://blockworks.co/news/blackrock-ibtc-bitcoin-etf"> IBTC disappeared</a> from the DTCC <a href="https://www.dtcc.com/products/cs/exchange_traded_funds_plain_new.php">website</a>, Bloomberg analyst James Seyffart <a href="https://twitter.com/JSeyff/status/1716835208467759263">speculated</a> that the US Securities and Exchange Commission “made a call to BlackRock.”



When Blockworks reached out to both the SEC and BlackRock about IBTC’s status on the DTCC website, both declined to comment.



Read more:<a href="https://blockworks.co/news/blackrock-ishares-bitcoin-etf"> BlackRock takes apparent new step in bitcoin ETF prep</a>



BlackRock noted that it’s still within the regulatory agency’s “filing restriction period.”



Following the Tuesday vanishing act, Balchunas said that he was “not totally shocked.”



Read more: <a href="https://blockworks.co/news/bitcoin-etf-price-rally">Is bitcoin’s ETF-fueled rally to $35K premature? Well, maybe</a>



Balchunas also <a href="https://twitter.com/EricBalchunas/status/1716833119364669924?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1716833119364669924%7Ctwgr%5E319477e5dd8c8d815f813133b06bacac65ec03a8%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fblockworks.co%2Fnews%2Fblackrock-ibtc-bitcoin-etf">said</a> that it wasn’t just the DTCC listing that was surprising, but “having a ticker ready and the Oct seeding that gave off a pre-launch crossing t’s and dotting i’s vibe.”



Van Buren Capital’s Scott Johnsson, earlier Tuesday, <a href="https://twitter.com/SGJohnsson/status/1716834575626715236">posted</a> on X saying, “not sure [BlackRock] were aware how closely they were going to be followed through this process. I mean, they should have been.”



Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) legged up slightly following the DTCC relisting, heading to $34,000 at time of publishing.



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BlackRock’s IBTC back on DTCC after vanishing early Tuesday

After disappearing early Tuesday, <a href="https://blockworks.co/news/blackrock-ibtc-dtcc-etf">BlackRock’s IBTC is back on the DTCC website</a>.



BlackRock’s proposed bitcoin ETF is no longer listed on the Depository Trust and Clearing Corporation website.



The iShares Bitcoin Trust had previously been the first potential ETF to list on the <a href="https://t.co/r5vYkAXroW">site</a>.



Bloomberg analyst Eric Balchunas said that the listing was “notable” and showed BlackRock as “leading charge on these logistics (seeder, ticker, dtcc) that tend to happen just prior to launch.”



“Hard not to view this as them getting signal that approval is certain/imminent,” he added Monday.



The developments come amid a rally in the price of bitcoin that has been attributed, at least in part, to positive sentiment around US regulatory approval of a bitcoin ETF. Bitcoin’s (<a href="https://blockworks.co/price/btc">BTC</a>) price briefly topped $35,000, and as of press time is trading around $33,500.&nbsp;



Read more: <a href="https://blockworks.co/news/blackrock-ishares-bitcoin-etf">BlackRock takes apparent new step in bitcoin ETF prep</a>



Yet that hoped-for approval may not be as close as some previously thought, given the removal from DTCC’s website.&nbsp;



BlackRock declined to comment when reached, saying that it’s still within the regulatory agency’s “ filing restriction period.”



A spokesperson for the US Securities and Exchange Commission declined to comment.&nbsp;



“I’m guessing the <a href="https://blockworks.co/tag/sec">SEC</a> made a call to BlackRock,” Bloomberg analyst James Seyffart <a href="https://twitter.com/JSeyff/status/1716835208467759263">said</a> in a post on X.



“Not totally shocked my guess is they were told to or want to wait until they are days not weeks or months away. As I said [yesterday] it was surprising to see it on there,” Balchunas posted.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Oh yeah look at that.. good catch, not totally shocked my guess is they were told to or want to wait until they are days not weeks or months away. As I said yest it was surprising to see it on there&mdash; Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1716833119364669924?ref_src=twsrc%5Etfw">October 24, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“It wasn&#8217;t just the DTCC list it was having a ticker ready and the Oct seeding that gave off a a pre-launch crossing t&#8217;s and dotting i&#8217;s vibe,” Balchunas said in another post.



Outside of the race for the spot bitcoin ETFs, Monday also saw the <a href="https://blockworks.co/news/grayscale-sec-gbtc-etf">DC Circuit Court of Appeals finalize its ruling around Grayscale’s application</a> to convert <a href="https://blockworks.co/tag/gbtc">GBTC</a> to an ETF. 



Updated Tuesday, Oct. 24 at 6:25 pm ET: Added that BlackRock’s IBTC is back on DTCC’s website.



Updated Oct. 24, 2023 at 2:01 pm ET: Added that an SEC spokesperson declined to comment.



Updated Oct. 24, 2023 at 12:03 pm ET: Added comments from Eric Balchunas.



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BlackRock bitcoin ETF no longer listed on DTCC’s website

The world’s largest asset manager continues to prep its proposed bitcoin ETF as segment observers have pointed to potential bullish signs that such products will be approved.



BlackRock’s planned iShares Bitcoin Trust is listed on the Depository Trust and Clearing Corporation (DTCC) website, industry watchers pointed out in X posts Monday. The planned fund’s ticker is IBTC, according to the listing.  



A DTCC spokesperson told Blockworks the proposed ETF was added to the list in August. The inclusion in the “eligibility file” of both active funds and potential ETF launches is “standard practice,” the representative noted, adding it is “not indicative” of regulatory approval.



Bloomberg Intelligence senior analyst Eric Balchunas said Monday that IBTC is the first proposed spot bitcoin ETF listed on DTCC — a financial market infrastructure giant that processes trillions of dollars in securities transactions daily.



A DTCC subsidiary — National Securities Clearing Corporation (NSCC) — has a process for clearing ETFs that includes “the ability to review…the ETF’s portfolio constituents, which is also used to automate the creation and redemption of ETF shares and their subsequent settlement,” <a href="https://www.dtcc.com/clearing-services/equities-trade-capture/etf">according</a> to the company.



A representative for <a href="https://blockworks.co/tag/dtcc">DTCC</a> did not immediately return a request for comment. A BlackRock spokesperson said the firm was unable to comment due to “filing restrictions.”



BlackRock amended its bitcoin ETF proposal on Oct. 18. 



Scott Johnsson, an associate at Davis Polk &amp; Wardwell, <a href="https://twitter.com/SGJohnsson/status/1716477694261485980">noted</a> the updated S-1 <a href="https://www.sec.gov/Archives/edgar/data/1980994/000143774923028549/bit20231017_s1a.htm">filing</a> included a CUSIP for the product — a nine-character code needed to identify a North American security for the clearing and settlement of trades.



The filing also contained language that seed creation baskets were to be purchased in October “subject to conditions” but did not specify a date or amount.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Note: Seeding is typically not a lot of money just enough to get ETF going. So I wouldn&#39;t read this as &#39;omg Blackrock is buying a ton of bitcoin&#39; at all but more the fact they doing it and disclosing it shows another step in the process of launching.&mdash; Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1716491230316486872?ref_src=twsrc%5Etfw">October 23, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“Def notable BlackRock is leading charge on these logistics (seeding, ticker, dtcc) that tend to happen just prior to launch,” Balchunas wrote in a Monday X post. “Hard not to view this as them getting signal that approval is certain/imminent.”



Others had amended their bitcoin ETF applications prior to BlackRock doing so.&nbsp;



Ark Invest and 21Shares had updated their bitcoin ETF <a href="https://www.sec.gov/Archives/edgar/data/1869699/000119312523254102/d549524ds1a.htm">filing</a> on Oct. 11. Bloomberg Intelligence analysts pointed to various additions, such as clarification that the trust’s assets would not be commingled with corporate or other customer assets.



Ark CEO Cathie Wood told CNBC in an <a href="https://twitter.com/JSeyff/status/1714624899589853309">interview</a> last week that the amendment followed dialogue with the SEC.



Read more: <a href="https://blockworks.co/news/spot-bitcoin-etf-optimism">Another would-be bitcoin ETF player: ‘It’s going to get approved’</a>



The filing amendments are not the only apparent progress being made in the quest for a bitcoin ETF.&nbsp;



Grayscale filed last week to register shares of its Bitcoin Trust (<a href="https://blockworks.co/tag/gbtc">GBTC</a>) under the Securities Act of 1933 as part of a new <a href="https://blockworks.co/news/grayscale-bitcoin-etf-milestone">step in the process</a> to ultimately convert the trust into an ETF.



The DC Circuit Court of Appeals on Monday <a href="https://blockworks.co/news/grayscale-sec-gbtc-etf">formalized its August ruling</a> that the SEC rejecting the GBTC conversion to an ETF, but approving bitcoin futures funds, was “arbitrary and capricious.”



The firm “looks forward to continuing to work constructively with the <a href="https://blockworks.co/tag/sec">SEC</a>” to convert GBTC to an ETF, a Grayscale spokesperson told Blockworks — adding that “we intend to move as expeditiously as possible.”



Bitcoin’s (<a href="https://blockworks.co/price/btc">BTC</a>) price was at roughly $31,600 at about 5:30 pm ET — up 6% from 24 hours prior.



Updated Oct. 25, 2023 at 9:03 am ET: Updated to reflect new information after receiving comments from a DTCC spokesperson.



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BlackRock takes apparent new step in bitcoin ETF prep

Financial market infrastructure giant DTCC has inked a deal to buy Securrency as part of a planned digital assets push.&nbsp;



The deal is meant to quicken the development of a platform designed to “unlock the power of institutional DeFi,” DTCC said in a Thursday statement.



The acquisition is set to close in the next few weeks. At that point, Securrency will become DTCC Digital Assets. Securrency CEO Nadine Chakar, who joined the firm from State Street in January, will lead the new DTCC subsidiary. 



Terms of the deal were not disclosed. A DTCC spokesperson did not immediately return a request for comment. 



Read more: <a href="https://blockworks.co/news/ex-state-street-digital-head-to-lead-regtech-blockchain-startup">Ex-State Street digital head to lead RegTech blockchain startup</a>



New York-based DTCC, which offers clearing and settlement services, processes trillions of dollars in securities transactions daily, according to its website.



Securrency is a blockchain-based financial and regulatory technology developer that <a href="https://blockworks.co/news/state-street-u-s-bank-in-on-30m-securrency-raise">raised $30 million in 2021</a> from State Street, US Bank, WisdomTree Investments and others. It has worked with WisdomTree to help the asset manager <a href="https://blockworks.co/news/wisdomtrees-latest-blockchain-enabled-funds-to-use-ethereum-stellar">launch “blockchain-enabled” funds</a> that keep a secondary record of share ownership on the Stellar or Ethereum blockchains.



“Securrency is an important strategic acquisition that will give us the technology to drive market-wide transformation by enabling end-to-end digital lifecycle processing for tokenized assets, digital currencies and other financial instruments,” DTCC CEO Frank La Salla said in a statement.



La Salla added that “this next generation of financial market infrastructure” is set to reduce settlement times, enhance regulatory oversight and improve investor experience.&nbsp;



<a href="https://blockworks.co/tag/tokenization">Tokenization</a> has been a hot topic over the past year.



BlackRock CEO Larry Fink called the tokenization of securities <a href="https://blockworks.co/news/blackrock-ceo-still-in-crypto-for-the-tech-despite-ftx-scandal">“the next generation for markets”</a> late last year. Projects and companies in recent years <a href="https://blockworks.co/news/real-world-assets-tradfi-defi-tokenization">have sought to bring physical and financial assets</a> — from debt securities to real estate properties — on-chain.



“Together, we will unlock opportunities to reimagine compliance, liquidity, efficiency and interoperability in trading real-world assets on the blockchain,” Chakar said in a statement.&nbsp;



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DTCC tees up institutional DeFi push with Securrency buy

Sebastian Sinclair

ANZ, one of Australia&#8217;s “Big Four” banks, has completed a transaction with tokenized assets utilizing its A$DC stablecoin and Chainlink&#8217;s Cross-Chain Interoperability Protocol, or CCIP.



The development showcased the bank&#8217;s capability to transfer funds across both open and private blockchain networks, furthering experiments being conducted to test the efficiency and security of deploying real-world assets on-chain.



According to a statement by Chainlink on social <a href="https://x.com/chainlink/status/1702265237171212530?s=20">platform X</a>, formerly known as Twitter, the move Wednesday “builds on the lessons learned” from the Swift blockchain interoperability initiative, originally conducted in June.



The effort, a <a href="https://blockworks.co/news/banks-can-10x-the-blockchain-industry-says-chainlink-co-founder">joint venture between leading global banks</a> and The Society for Worldwide Interbank Financial Telecommunication, seeks to test the limits of blockchain interoperability.



Its objective: Offering major financial institutions a centralized gateway to various networks, in a bid to reduce the operational hurdles and investment required to link the global financial system.



Banks involved included BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SIX Digital Exchange (SDX), and The Depository Trust and Clearing Corporation (DTCC), in addition to ANZ or the Australia and New Zealand Banking Group.



Chainlink has played a central role in understanding whether banks and the crypto sector can coexist in harmony, challenging commonly held concerns associated with retail CBDCs.



Chainlink’s product, which has so far been well received, serves as a &#8220;<a href="https://blockworks.co/news/chainlink-ccip-launch">universal messaging interface</a>&#8221; for communication between various chains by utilizing its Oracle network.



CCIP works with <a href="https://www.veradiverdict.com/p/ccip">three separate Oracle networks</a>. Two of those networks handle sending/receiving messages and transferring value, while another watches over to make sure those transactions aren&#8217;t risky.



“The bank’s work with its A$DC stablecoin and the tokenization of real-world assets has already provided us with valuable lessons as we continue to investigate enterprise-grade use cases,” Nigel Dobson, ANZ’s banking services portfolio lead said in a statement on Wednesday.



“Based on market activity, we expect the continued adoption of digital assets will result in the proliferation of multiple assets across many blockchain networks.”



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Australian Bank ANZ leveraging Chainlink’s CCIP for cross-chain operability

Bessie Liu

Chainlink is switching on its Cross Chain Interoperability Protocol (CCIP), Monday, with Synthetix getting early access to its mainnet. A testnet will open up to all developers on Thursday, July 20.



The protocol builds upon Chainlink’s extensive oracle network to differentiate it from competitors, while it looks to capitalize on connections forged along traditional financial rails.&nbsp;



As blockchains scale — whether layer-2 networks, sidechains or app-specific chains — these networks will need to communicate with each other.



Existing cross-chain solutions — such as bridges, for example — have attempted to tackle the problem of moving data and assets safely, <a href="https://blockworks.co/news/rethinking-interoperability-after-string-of-crypto-hacks">with mixed results</a>.&nbsp;



Other interoperability solutions such as light-clients such as <a href="https://blockworks.co/tag/ibc">IBC</a>, general message passing like <a href="https://blockworks.co/tag/axelar">Axelar</a> and <a href="https://blockworks.co/news/rethinking-bridges-orb-labs-imagines-world-where-every-transaction-is-free">other hybrid schemes</a> have tried to fill the gaps, and now Chainlink is joining in the effort.



CCIP will first be available on Ethereum, Optimism, Polygon and Avalanche.



<h2 class="wp-block-heading">How does CCIP work?</h2>



In an interview with Blockworks, Chainlink founder and CEO Sergey Nazarov noted that Chainlink will use its <a href="https://blockworks.co/tag/oracles">oracle networks</a> to enable CCIP.



“One oracle network is responsible for channeling messages and value. The other one is responsible for monitoring and determining if the properties of the transactions going through the first one are risky or not,” Nazarov said.



Developers who are interested in building cross-chain solutions can build their products on top of CCIP through Arbitrary Messaging.&nbsp;



This means that a smart contract from Chain X will utilize Chainlinks’ messaging router to send messages to Chainlink&#8217;s decentralized oracle networks (DONs). These DONs will then securely and privately communicate with the destination chain messaging router, which will validate the information and send it to Chain Y’s smart contract.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh3.googleusercontent.com/gdaXVhxYBRPTI7YJzy-VYSOyb-9zIweNTpHzGHQXPyKIaBLclHHFlimB4tt-ydBR8-71-UoeQ0dEJqUo08BT4DW50OquXiW86ozfG0K1_V8BaE_7rjMSWFw-aU9VzyhtlIqOC5FnKDb-jEDZysF4UaM" alt=""/><figcaption class="wp-element-caption">Source: Chainlink</figcaption></figure>



Beyond having basic communication capabilities, CCIP also has complete token transfer capabilities, <a href="https://docs.chain.link/ccip/tutorials/cross-chain-tokens">according to</a> its documentation, which Chainlink says means that developers for token pool smart contracts won&#8217;t need to write customized code.&nbsp;



A separate Active Risk Management (ARM) network aims to detect any malicious cross-chain activity. When found, ARM will automatically pause services and protect user funds.



ARM operates similarly to how banks protect their customers from fraudulent activity, Nazarov explained.



“If you have been sending money to a friend for years, Venmo, PayPal, very quickly approves it, but if you decide to send money to buy a painting from someone in Eastern Europe, they will have questions,” he said. “The fundamental idea is that you can accurately assess risk based on repeat transactions to known parties.”



<h2 class="wp-block-heading">Targeting traditional finance money</h2>



One of the most exciting aspects of introducing CCIP is its potential to link up DeFi with traditional financial institutions, Nazarov explains.&nbsp;



Swift (Society for Worldwide Interbank Financial Telecommunication) is planning to use CCIP to work with multinational banks across the globe to bring institutional-grade, multibillion-dollar real-world asset tokens into the world of DeFi, Blockworks <a href="https://blockworks.co/news/banks-can-10x-the-blockchain-industry-says-chainlink-co-founder">previously reported</a>.



Among the banks signing on are Australia and New Zealand Banking Group (ANZ), BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SIX Digital Exchange (SDX), and The Depository Trust and Clearing Corporation (DTCC), according to a press release.&nbsp;



“When those real-world asset tokens become available, they can go over CCIP into the public blockchain world, which will do two things: It&#8217;ll grow the total industry size of the entire blockchain industry and it&#8217;ll provide diversified collateral,” Nazarov said.



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Chainlink founder says CCIP opens DeFi for business

Macauley Peterson

The Society for Worldwide Interbank Financial Telecommunication (Swift) on Tuesday announced a collaboration between major banks and Web3 infrastructure provider Chainlink to trial connecting private and public permissionless blockchains.



Swift is a global financial messaging system that underpins most international money and securities transfers. In 2022, it initiated tests to explore the interoperability of private blockchains among financial institutions for tokenized assets. Building upon this initiative, Swift is now expanding the scope of its experiments to encompass public blockchains. To facilitate this expansion, Swift will use Chainlink&#8217;s Cross-Chain Interoperability Protocol (CCIP).



“More institutions are beginning to explore how to serve customers on both permissioned and public blockchain networks like Ethereum,” Jonathan Ehrenfeld, head of securities strategy at Swift, said in a <a href="https://www.swift.com/news-events/news/swift-explores-blockchain-interoperability-remove-friction-tokenised-asset-settlement">statement</a>.



The collaboration includes major financial institutions across the globe, including <a href="https://blockworks.co/tag/bnp-paribas">BNP Paribas</a>, <a href="https://blockworks.co/tag/bny-mellon">BNY Mellon</a>, <a href="https://blockworks.co/tag/citi">Citi</a>, <a href="https://blockworks.co/tag/euroclear">Euroclear</a>, <a href="https://blockworks.co/tag/six">SIX Digital Exchange (SDX)</a> and <a href="https://blockworks.co/tag/DTCC">The Depository Trust &amp; Clearing Corporation (DTCC)</a>.



Chainlink is providing what Swift calls an “enterprise account abstraction layer.” Sergey Nazarov, one of the company&#8217;s co-founders, said that he thinks the asset tokenization trend is being embraced by banks and financial market infrastructure institutions alike, which has the potential to “10x the blockchain industry size.” “It shows that the largest financial institutions — even in a down market — are interested in blockchain technology reinventing how the capital markets work,” Nazarov told Blockworks.



CCIP is a “universal messaging interface” for cross-blockchain communications. Its ability to interface with private blockchains, plus security features like an active risk management network, are what differentiate it from alternatives like <a href="https://blockworks.co/tag/axelar">Axelar’s General Message Passing</a> and make it appealing to major financial players, Nazarov said.



CCIP uses the same security model as Chainlink’s oracle network, which has processed over seven trillions of dollars in value, he said.



<h2 class="wp-block-heading">Swift’s goal: Use existing bank systems</h2>



Swift launched its first messaging services in 1977, replacing the prevailing technology of the time, <a href="https://en.wikipedia.org/wiki/Telex">Telex</a> — it was “like a private financial internet before the internet,” Nazarov said. There is a lot of legacy financial infrastructure that banks want to preserve while also gaining the efficiencies that they recognize are available from blockchain networks.



Tom Zschach, chief innovation officer at Swift, sees a <a href="https://blockworks.co/tag/multichain">multichain</a> future, and connecting to hundreds of different chains is not feasible for most banks. Chainlink aims to save thousands of global banks time and money by linking chains through one integration.



“What&#8217;s missing is the ability to send [assets] from a bank chain to a public chain — banks want to do that,” Nazarov said.



“It’s not called chain link by accident,” he chuckled.



The proof of concept will demonstrate how banks can practically interoperate across these networks, both public and private.



For instance, Nazarov said, a bank can issue a security token on its own private chain, using CCIP, then move the token to the chain of a custodian such as BNY Mellon. It can update a proof-of-reserves record on CCIP, and enable a third bank to buy the tokenized security, and transfer it to its own private chain.



In this example, all the chains in question are private, but Nazarov pointed to <a href="https://blockworks.co/tag/societe-generale">French bank Société Générale’s</a> use of public Ethereum as an example where public blockchains can be in the loop.



“In my eyes, blockchains, public and private, will eventually get enough features that they become the same thing,” Nazarov said, likening it to the evolution of various independent networks into what we now call simply “the internet.”



Once the technology is in place to let banks take various securities and move them around easily, they will adapt certain types for use on public chains, he said.



They are too big a market at this point to ignore.



“I think they realize the digital asset class is not going anywhere,” Nazarov said.



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Banks Can ‘10x the Blockchain Industry’ Says Chainlink Co-founder

<div id="highlights-block_6303d23ea211f" class="highlights">
 <ul>
 <li>DTCC launches distributed ledger technology platform for settlements</li>
 <li>Tokenization is on the rise, the Bank of International Settlements said in 2020</li>
 </ul>
 
</div>



Clearing and settlement house Depository Trust and Clearing Corporation (DTCC) has launched a private and permissioned blockchain network as an alternative settlement platform.&nbsp;



Project Ion, which leverages distributed ledger technology (DLT), is now processing an average of 100,000 bilateral equity transactions per day, DTCC <a href="https://www.dtcc.com/news/2022/august/22/project-ion" target="_blank" rel="noreferrer noopener">announced</a> Monday. 



“The goal of Project Ion is to ultimately provide a resilient, secure and scalable alternative settlement service to clients, with the option to leverage DLT for those firms who wish to take advantage of the emerging technology,” DTCC said in a statement.&nbsp;



DLT provides a safer, cheaper, and more efficient alternative to traditional settlement methods, Murray Pozmanter, said in the statement. Pozmanter is the managing director and president of DTCC clearing agency services and head of global business operations. 



<h3 class="wp-block-heading">Other blockchain settlement efforts</h3>



A distributed ledger is a record of transactions held between a network of computers, or nodes. The use of DLT generally relies on cryptography to allow nodes to securely propose, validate and record changes and updates to the synchronized ledger without necessarily needing a central authority, as a 2020 <a href="https://www.bis.org/publ/qtrpdf/r_qt2003i.htm" target="_blank" rel="noreferrer noopener">report</a> from the Bank of International Settlements (BIS) explained. 



Researchers from the BIS said that DLT and tokenization of securities could transform post-trade clearing and settlement operations, but the inherent challenges of credit risk and liquidity associated with traditional methods remain.&nbsp;



“To succeed, tokens will need to interoperate with account-based systems, at least in the interim,” researchers wrote in the report.&nbsp;



Financial institutions have become increasingly interested in leveraging DLT in recent years for trading and settlements. Also in 2020, <a href="https://www.credit-suisse.com/about-us-news/en/articles/media-releases/financial-institutions-team-up-to-develop-fundsdlt--a-groundbrea-202003.html">Credit Suisse</a> announced a DLT-based platform for investment funds.



More recently, a consortium of French banks experimented with using a private blockchain<a href="https://cms.blockworks.co/french-central-bank-trades-oats-on-private-blockchain/" target="_blank" rel="noreferrer noopener"> to settle debt securities</a> in Oct. 2021. That followed <a href="https://cms.blockworks.co/major-french-bank-wants-to-back-the-dai-stablecoin-with-40m-in-bonds/" target="_blank" rel="noreferrer noopener">a trial by French bank Société Générale</a> to use public Ethereum and mint MakerDAO’s DAI stablecoin through the issuance of euro-denominated bonds.



Signature Bank customers have been able to initiate real-time Fedwire transactions using Signet, the firm’s DLT payments platform, since April 2022.



BNY Mellon and Goldman Sachs <a href="https://www.prnewswire.com/news-releases/bny-mellon-and-goldman-sachs-settle-first-hqlax-agency-securities-lending-transactions-301589545.html" target="_blank" rel="noreferrer noopener">partnered</a> on HQLAx, a DLT-based securities lending platform. Its first transaction was completed in July 2022.



Project Ion is being designed to adhere to rigorous regulatory standards and deliver the resiliency, volume capacity, security, scalability and risk controls that DTCC is known for, the firm said in the statement.



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TradFi Clearing House Turns to Blockchain to Settle Transactions

Tanaya Macheel

<div id="highlights-block_6074a76337bcc" class="highlights">
 <ul>
 <li>Compared to traditional prime brokerages, crypto providers’ exchanges operate as separate units</li>
 <li>Traditional prime services providers may not be going anywhere anytime soon</li>
 </ul>
 
</div>



Even with more and more<a href="https://cms.blockworks.co/crypto-prime-brokerages-look-to-bundle-services-to-meet-growing-institutional-demand/" target="_blank" rel="noreferrer noopener"> new crypto prime brokerage options</a> on the market, traditional prime services providers may not be going anywhere anytime soon.&nbsp;



Compared to traditional prime brokerages, crypto providers’ exchanges operate as separate units with their own order books and prices. That means investors need to onboard at various different platforms and fund their accounts on each of them, which some in the traditional world might see as costly and inefficient.



“The way that the crypto market works is different from a traditional space,” said Michael Shaulov, CEO and co-founder of <a href="https://cms.blockworks.co/fireblocks-raises-133m-to-scale-custody-platform-double-headcount/" target="_blank" rel="noreferrer noopener">Fireblocks</a>, who spoke at an online event on Thursday hosted by CryptoCompare and BlockFills. “We rely on DTCC or on other market functions that will provide centralized clearing by the finish. The way the [crypto] market operates (and Binance.US is a great example), if Binance needs to operate one leg which is an institutional flow but on the other leg it has retail users that can withdraw those funds at any point in time, the market structure needs to be different.”



While Shaulov said the market is pivoting and prime services providers are trying to provide the services that allow institutional firms to take advantage of what the digital asset market has to offer, not everyone will, according to Lory Kehoe, director of digital assets and blockchain for BNY Mellon (which uses Fireblocks technology for its <a href="https://cms.blockworks.co/bny-mellon-digital-assets-are-coming-of-age/" target="_blank" rel="noreferrer noopener">digital assets custody service</a>).



“Traditional prime brokerage services aren’t going to go away,” Kehoe said during the online event. “There’s still a definite requirement for them. It&#8217;s also going to take some time for regulatory clarity to come through. I expect what we&#8217;ll see is some will pivot successfully and provide services in the crypto space as well as in the traditional space, and some won&#8217;t make that pivot.”



<h3 class="wp-block-heading">Fragmented liquidity and trading</h3>



One reason digital assets trading is so retail dominated is because of the fragmentation of liquidity and trading across geographies and exchanges, according to another member of the online event, Neil Van Huis, partner and director of trading at BlockFills, an institutional digital asset liquidity <a href="https://blockfills.com/">provider</a>.



Prime brokerage in digital assets might look different from prime brokerage in the traditional world in that the crypto community has no problem letting trades settle at the end of the day. “That&#8217;s just something that seems normal to us,” he said.



Trading on an exchange, by contrast, changes the participants with whom you&#8217;re interacting.&nbsp;



“If you want to go and do an institutionally focused trade on a predominantly retail-focused exchange, that is going to be a difficult thing to do, unless you can have a prime services arm that essentially provides credit to everyone that&#8217;s been involved in this type of transaction,” Van Huis said. “That’s typically very costly. It&#8217;s not a capital efficient thing to do.”



BlockFills is trying to disrupt the traditional futures clearing model by creating an ecosystem that focuses on institutional participation so capital efficiency is easier to handle, Van Huis said. It’s building a set of technology, products or services that allow institutional participants to do “about as much as they&#8217;d like to do in the space in a seamless and compliant manner.”



“If you can use blockchain technology from companies like Fireblocks, and you can work with custodians and banks like BNY Mellon, to accomplish some of the things that you&#8217;re doing with other institutionally minded folks that are providing liquidity in your ecosystem, you can actually achieve a result that we&#8217;re talking about,” Van Huis said.



<h3 class="wp-block-heading">An institutional force</h3>



The digital asset industry was largely retail led until about 2019, and there&#8217;s a strong institutional force coming through now.



Binance.US has more retail flow than any other exchange because it has the lowest price point in the US, according to Rena Shah, head of operations and business development at Binance.US, who was also on the event panel. It is, for many, their gateway into digital assets.



“We are getting our first entrance of people doing the first couple hundred, couple thousand dollars, then slowly aggregating larger positions, they want to become high frequency traders — it’s similar to a Wall Street bets situation where people are pulling their own knowledge so that they can move the market together,” Shah said.



On the flip side, she said an increasing number of entities and corporate structures have been adding digital assets to their balance sheets, and while Binance.US has take orders coming in from retail investors, institutions are on its maker side.



“It’s a really interesting ecosystem,” she said. “For once they actually get to trade against each other — it’s not an institution trading against an institution. They want these very attractive retail orders to trade against because they know that there are real people behind, moving the market.&#8221;



“[Institutions] generally prefer to come to an exchange, more so than a traditional prime brokerage because of the perspective we provide,” Shah said. “We are not a team that&#8217;s kind of touches digital assets, we&#8217;re only in digital assets. This is all that we know, this is all that we advise on and I think they kind of appreciate the unique perspective as opposed to having just a fraction.”