DTCC and Chainlink Conclude Pilot Program for Tokenizing Traditional Finance Funds

The Depository Trust and Clearing Corporation (DTCC), the world’s largest settlement system, has partnered with blockchain oracle Chainlink to conclude a pilot program aimed at enhancing the tokenization of traditional finance funds. This pilot, named the Smart NAV Pilot, involved several major U.S. banking firms and focused on standardizing net asset value (NAV) data delivery on blockchains.

The program demonstrated that structured data could be delivered on-chain, which paves the way for various applications such as tokenized funds and “bulk consumer” smart contracts. The DTCC’s report highlighted that the pilot facilitated better-automated data management, minimal disruption to existing market practices, and easier access to historical data for funds.

Prominent U.S. banking firms participated in the pilot, including American Century Investments, BNY Mellon, Edward Jones, Franklin Templeton, Invesco, JPMorgan, MFS Investment Management, Mid Atlantic Trust, State Street, and U.S. Bank. Chainlink’s Cross-Chain Interoperability Protocol (CCIP) played a crucial role in achieving the program’s objectives.

The success of the Smart NAV Pilot has significant implications for the financial industry, enabling brokerage applications, more automated data dissemination, and broader API solutions for price data. Following the report’s release, Chainlink’s native token, LINK, saw a 12.5% increase in value, reflecting the positive market response.

This development coincides with a rising interest in real-world asset (RWA) tokenization among major financial institutions. On March 19, BlackRock introduced a tokenized money market fund called BUIDL on the Ethereum network, allowing investors to acquire tokens representing shares in the fund, which primarily invests in U.S. Treasury bills. This fund, operating as an ERC-20 token, is often referred to as the “digital liquidity fund.”

The total value locked (TVL) for RWA protocols soared to nearly $8 billion by the end of April, driven by platforms like Toucan, KlimaDAO, and Propy. Tokenized treasuries have also seen significant growth, with $1.29 billion locked in tokenized U.S. treasuries and bonds, representing an 80% surge since the beginning of 2024. Additionally, Singapore-based DigiFT launched its US Treasury bill depository receipt (DR) tokens, further illustrating the expanding digital asset landscape.

The DTCC and Chainlink’s successful pilot program marks a pivotal step towards integrating traditional finance with blockchain technology, setting the stage for more innovations in the tokenization of financial assets.