Clearstream is preparing to let clients tokenize portions of the €22 trillion in assets it custodies, with issuances lined up for later this year. The Deutsche Börse Group subsidiary announced its next generation digital securities infrastructure in June, but given that Clearstream created a digital unit in 2018 and has been very active since then, there was a question of whether this meant consolidating its disparate DLT activities into one coherent offering, or whether it was about something new. The answer is both.
During an interview with Clearstream’s Thilo Derenbach, he spoke about the pool of conventional assets as the ocean, with the quantities tokenized so far as merely drops making up puddles. Another major central securities depository, the DTCC, also has tokenization plans, but the starting points of the two FMIs are quite different.
Like the DTCC, tokenized securities from Clearstream carry full ownership and voting rights, and the organization will continue to only interact with institutions in its B2B2C model. While the DTC is allowed to use permissionless blockchains, Clearstream needs to stick to permissioned DLTs to comply with Europe’s CSDR regulations, and has chosen Besu for compatibility with other FMIs and a permissionless future.
The DTCC is starting by tokenizing the 1,000 largest equities, Treasuries and certain ETFs, whereas Clearstream has decided to sidestep equities in the first instance. Derenbach described equities as part of the ocean rather than the puddle or the lake. That’s because Clearstream wants to manage tokenized securities end to end, and while plain vanilla dividends might be easy to program into smart contracts, equities have an infinite array of corporate actions. The initial instruments will be fixed income, tokenized money market funds (MMFs) and retail structured products.
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