The Managing Director and Global Head of DTCC Digital Assets, Nadine Chakar, provided her testimony today before the House Financial Services Subcommittee on Digital Assets. During her testimony, she focused on what she believes is the potential of tokenization in financial markets. The hearing was titled “Next Generation Infrastructure: Chakar also elaborated on how tokenization of real-world assets is expected to enable efficient markets in a post titled “How Tokenization of Real-World Assets Will Facilitate Efficient Markets.” This also comprises tokenized securities, which are securities that are digitized and could help the U. S markets greatly.
Chakar also discussed possible advantages of tokenization, such as increased automation, efficiency rates, and significant cost reduction. However, she noted that market transformation cannot be facilitated through technology alone. In her opinion, successful implementation is contingent upon the cooperation and coordination of all stakeholders and, therefore, should not be undertaken lightly.
According to Chakar, risks are well managed at DTCC, and the organization has sought to engage the financial industry. In total, they have created a complete set of risk management principles and controls for the broad integration of digital asset solutions. These principles apply to pilot projects and center around managing risk in the ecosystem to enable the development of tokenized securities markets. These include legal certainty, regulation compliance, antifragility, security, customer asset protection, connectedness and interoperation, and operations-scale enablement.
For nearly a decade, DTCC has been at the forefront of advocating and spearheading the use of tokenization of conventional asset classes. They bought Securrency in December 2023 and rebranded it as the DTCC Digital Assets. The acquisition grants DTCC highly efficient infrastructure and solutions that support the processing of tokenized conventional financial securities from beginning to end.
Chakar also knows that building an elaborate digital assets platform is challenging but underlines that simplifying the process is more than advancing technology. It requires a conscious effort to integrate principles of regulatory compliance, security, and operational sustainability. These measures are critical to ensuring a smooth development of the tokenized assets market, thus creating value for all parties engaged in the market.
In her statement, Chakar highlighted the great potential that DLT has for financial markets. She outlined the different opportunities and challenges related to this new technology and also offered an introduction to how DTCC is at the forefront of implementing this kind of technology. She stressed that promoting innovative tokenization should be based on the cooperation of the authorities, financial organizations, and technology players to create a robust and secure ecosystem for tokenized assets.
As DTCC experiments with the possibilities of financial technology, creativity in problem-solving and collaboration will be pivotal to integrating digital assets into the firm’s operations. Efforts to create policies to provide a clear compliance framework and risk management highlight the company’s endeavours to create a safe and effective market environment. Over the years, DTCC has been upgrading its digital assets platform and is well on its way to contributing immensely to the evolution of the financial markets by availing the possibilities of tokenization to make tremendous leaps.