Clearinghouse backs Ethereum token standard for US securities

The Depository Trust & Clearing Corporation (DTCC) — the US’s primary clearinghouse for securities transactions — has committed to promoting Ethereum’s ERC-3643 standard for permissioned securities tokens, according to a March 20 announcement. 

DTCC is joining the ERC3643 Association, a nonprofit dedicated to catalyzing the standard’s adoption with the goal of “promoting and advancing the ERC3643 token standard,” it said.

The endorsement highlights how US regulators are embracing tokenization after President Donald Trump vowed to make America the “world’s crypto capital.” 

It also suggests that the Ethereum blockchain network may play an important role in the US’s permissioned security token ecosystem. 

“DTCC will help lead the future of tokenization and support institutional adoption at scale,” Dennis O’Connell, president of the ERC3643 Association, said in a statement.

ERC-3643 is a standard for permissioned Ethereum tokens. Source: ERC3643.org

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The DTCC is a private organization closely overseen by the US Securities and Exchange Commission (SEC). It settles most US securities transactions.

In 2023, the DTCC processed transactions worth an aggregate of $3 quadrillion, according to its annual report. 

Also known as the T-REX Protocol, ERC-3643 is “an open-source suite of smart contracts that enables the issuance, management, and transfer of permissioned tokens […] even on permissionless blockchains,” according to the ERC3643 Association’s website. 

It relies on a custom-built decentralized identity protocol to ensure that only users meeting pre-specified conditions can become tokenholders. 

The DTCC has been an early mover among US financial overseers in embracing blockchain technology, piloting several initiatives related to onchain securities transactions. They include testing settling tokenized US Treasury Bills on the Canton Network and piloting private asset tokenization on an Avalanche (AVAX) subnet. 

In February, the clearinghouse launched ComposerX, a platform designed to streamline token creation and settlement for regulated US financial institutions.

In November, the Commodity Future Trading Commission (CFTC) — a top US financial regulator — tipped plans to explore similar technologies for onchain settlement in the derivatives markets.

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