Follow up: Euroclear explores tokenized collateral for crypto firms

On Wednesday Digital Asset announced a partnership with Euroclear to explore the market appetite for tokenized collateral on the Canton Global Collateral Network (GCN). Together they aim to study the potential for at least two opportunities. One is to make collateral for traditional institutions (TradFi) more globally mobile, rather than being locked in one geographic region. Another is to explore providing collateral management services for cryptocurrency exchanges.

We were curious about the second one, given Euroclear is such a significant financial market infrastructure. As a tri-party agent, its Collateral Highway manages $2 trillion in assets.

A tri-party agent is a solution provider for collateral management. Managing collateral is a non trivial task, so many firms choose to outsource the work to a third party rather than developing the software and function themselves. While collateral custody is one of the services, it’s a lot more.

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