Today the DTCC, Clearstream and Euroclear published a paper outlining how they can help the securities industry embrace digital assets and the benefits of adopting DLT. While recognizing that DLT offers major benefits, they highlight the current fragmentation challenges around liquidity and standards as well as a lack of scalability. And they believe they can help with coordination.
They have a point. There are an ever increasing number of DLT solutions each operating in a silo. Some of them have quite a bit of scale in terms of volumes. But very few digital securities solutions have broad adoption. Others claim a large number of participants, but a little digging often reveals a smaller number generating most of the transactions.
A key point is that most are not interoperable, creating new silos of liquidity. It’s ironic because that’s one of blockchain’s biggest potential benefits. Interoperability is not just about technology but also standards.
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