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DTCC looks to extend processing to digital assets

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DTCC, the Depository Trust and Clearing Corporation, is the most significant institution in the processing of securities worldwide: in 2019 its various arms processed $2.15 quadrillion’s worth of securities transactions.

It’s at the heart of the infrastructure that blockchain could, in theory, make redundant. DTCC has pursued its own initiatives in using distributed-ledger technology. Then last year it took the next step and began to get its head around the emerging prospect of asset tokenization: creating securities in purely digital form.

If securities tokens are to go mainstream and scale, it will likely require the participation of DTCC and firms like it.

So what is the latest in DTCC’s thinking?

Jennifer Peve, managing director for business innovation at DTCC in Jersey City, N.J., says the firm has looked at two use cases: private markets and STOs (security token offerings).

Private markets

DTCC doesn’t play in private markets until a company stops being private and goes for a listing and makes its shares public. Private equity markets have grown in the U.S. as more companies, particularly those in tech, prefer to stay private for as long as possible.

This may suit those founders, but it deprives securities investors of access to growth opportunities. Private markets are also hard to digitize; vendors only service late stage, pre-IPO companies in anticipation of their going public.

Tokenization, however, allows the private shares to be represented on a blockchain, where they can be exchanged. This makes these instruments easy to process – thus providing DTCC with an opportunity to play in this space. The same thinking extends to the emergence last year of the first STOs.

STOs launching on Ethereum is where the innovation is happening

Jennifer Peve, DTCC

“Private markets have seen some vendor solutions that are built on public blockchain,” Peve said. Wall Street firms have typically not embraced public blockchain, at least not directly. “DTCC saw an opportunity to extend our strengthsof providing post-trade infrastructure to the private market space.”

DTCC has built Project Whitney, a prototype digital infrastructure on Ethereum, a public blockchain, for issuer services across primary and secondary private markets.

Public Ethereum or private DLT?

Whitney includes activities including registrar, recordkeeping, and compliance. The project’s specs included smart contracts, off-chain infrastructure, and API integrations. The prototype followed a test company to mint tokens and have them trade on Whitney.

DTCC now seeks outside firms to test the prototype, but Peve says DTCC is exploring enterprise, permissioned blockchains for future developments.

“We saw most STOs were launching on Ethereum; that’s where we see the innovation happening,” she said. “Using Ethereum enables you to reach a global marketplace quickly. DTCC believes our findings and industry sentiment will inform on whether long-term solutions should be built using private ledgers.”

DTCC has tested Ethereum to understand the pros and cons of using a public blockchain. The pros included access to a wide range of wallets, trading venues, and custodial offerings in the market, while remaining compliant; its off-chain stock record provided tokenholders a real-time view of their accounts.

The cons, however, may outweigh the benefits.

These projects are designed to fit within Wall Street’s existing ecosystem

Jennifer Peve, DTCC

“Public blockchain led to uncertainty of transaction cost,” Peve said. Although Whitney was able to optimize Ethereum’s proof-of-work consensus protocol, it still found variation in how much “gas” (electricity and time) was required to validate blocks and confirm trades. “This variability creates costs and uncertainty,” she said – although Whitney will continue to test on Ethereum.

DTCC hopes to expand testing with more participants while extending its integration to Hyperledger Fabric and R3 Corda.

Processing for securities tokens

Meanwhile DTCC is also working on DLT solutions for its existing securities processing business. DLT has the potential to enable the U.S. market to settle on T+1 (one day after the trade is executed) or even T+0. This capability already exists in DTCC’s traditional infrastructure but Wall Street players tend not to have internal systems capable of meeting those speeds; final settlement is usually T+2.

Project Ion is a DTCC project to “lift and shift” Wall Street’s plumbing onto DLT to enable it to operate faster and modernize capital-markets infrastructure. This implies intra-day settlement, a reduction of risk, lower capital reserves for clearing among financial institutions including DTCC itself (through its securities processing arm, National Securities Clearing Corp.).

This represents a much broader, more aggressive approach to DLT than DTCC’s previous experiments, which looked at very niche parts of its processing businesses – in some cases, DTCC found its traditional infrastructure remained the better option.

If Project Ion is to be deployed, it would most likely be put to work first for securities tokens. Thus it represents the destination for private digital assets that graduate from Whitney into the public domain. But the longer term implication is that DTCC will be ready for other firms to tokenizing outstanding securities – and perhaps provide them with a nudge.

Project Ion could also be used for the cash legs of transactions (as in, say, repo agreements). This puts it in the realm of digital payments. By representing cash on blockchain, Ion also puts DTCC in a position to handle central-bank digital currencies, should those arise, or stablecoins representing dollars (say).

“If these projects move forward, they are designed to fit within Wall Street’s existing ecosystem,” Peve said, giving the DTCC a role in fund administration, transfer agency, issuer services such as proxy voting, and other capital-markets processing. But that ecosystem itself is going through big changes.

Source: https://www.digfingroup.com/dtcc-digital-assets/

Blockchain

CBDCs Are Not That Stable And May Eventually Kill Bitcoin, Says Financial Expert

Financial journalist Edward Chancellor predicted that launching central bank digital currencies can be catastrophic for Bitcoin.

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Edward Chancellor – a British journalist and financial historian, explained that the first central bank digital currencies are likely to raise inflation which can lead to the destruction of Bitcoin. He agreed that CBDCs are ”cool” but certainly not stable.

CBDCs Would Mean The End Of BTC

Nowadays, many central banks of numerous leading economies such as China, Japan, and the US, are researching the option of launching their own CBDC. In a recent interview for Reuters, Edward Chancellor opined that central bank digital currencies are highly risky projects.

He said that CBDCs might even kill Bitcoin. Chancellor explained that it is much easier to distribute and ”print” digital currencies rather than cash, and that will cause an utterly high level of inflation.

He then added that in order to solve the issue, the governments and central banks would have to fix the emission of their digital coins – which number would be much higher than 21 million bitcoins:

”When banks get it right with CBDCs this will kill Bitcoin.”

The historian analyzed that changes in the form of money are normal and have happened multiple times in the past. As an example, he pointed to the paper money which once replaced metal coins. Chancellor predicted that in the process of the financial revolution, digital currencies would invade the world, but he opined that Bitcoin would not be among one of them.


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In conclusion, the journalist said that central bank digital currencies are ”cool” as a project but can not qualify as stable.

Deutsche Bank on CBDCs

Recently, the multinational investment banking giant – Deutsche bank – shared similar thoughts. The CIO of the German institution – Christian Nolting – predicted that CBDCs could damage Bitcoin’s role as a payment instrument. He also suggested that the primary cryptocurrency could serve as a store of value.

According to Nolting, the crypto industry is ”here to stay.” On the other hand, he warned that ”governments and more digitally-aware populations might ultimately prefer to go with CBDCs,” instead of relying on the decentralized nature of BTC. Furthermore, some potentially harming legislative frameworks developed by world regulators could reduce digital assets’ chances of serving as international payment instruments:

”A widespread introduction of CBDCs accompanied by higher regulation of cryptocurrencies could create a more challenging environment for crypto assets as some of their advantages compared to traditional financial assets would fade in the longer term.”

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Source: https://cryptopotato.com/cbdcs-are-not-that-stable-and-may-eventually-kill-bitcoin-says-financial-expert/

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Blockchain

CBDCs Are Not That Stable And May Eventually Kill Bitcoin, Says Financial Expert

Financial journalist Edward Chancellor predicted that launching central bank digital currencies can be catastrophic for Bitcoin.

Avatar

Published

on

Edward Chancellor – a British journalist and financial historian, explained that the first central bank digital currencies are likely to raise inflation which can lead to the destruction of Bitcoin. He agreed that CBDCs are ”cool” but certainly not stable.

CBDCs Would Mean The End Of BTC

Nowadays, many central banks of numerous leading economies such as China, Japan, and the US, are researching the option of launching their own CBDC. In a recent interview for Reuters, Edward Chancellor opined that central bank digital currencies are highly risky projects.

He said that CBDCs might even kill Bitcoin. Chancellor explained that it is much easier to distribute and ”print” digital currencies rather than cash, and that will cause an utterly high level of inflation.

He then added that in order to solve the issue, the governments and central banks would have to fix the emission of their digital coins – which number would be much higher than 21 million bitcoins:

”When banks get it right with CBDCs this will kill Bitcoin.”

The historian analyzed that changes in the form of money are normal and have happened multiple times in the past. As an example, he pointed to the paper money which once replaced metal coins. Chancellor predicted that in the process of the financial revolution, digital currencies would invade the world, but he opined that Bitcoin would not be among one of them.


ADVERTISEMENT

In conclusion, the journalist said that central bank digital currencies are ”cool” as a project but can not qualify as stable.

Deutsche Bank on CBDCs

Recently, the multinational investment banking giant – Deutsche bank – shared similar thoughts. The CIO of the German institution – Christian Nolting – predicted that CBDCs could damage Bitcoin’s role as a payment instrument. He also suggested that the primary cryptocurrency could serve as a store of value.

According to Nolting, the crypto industry is ”here to stay.” On the other hand, he warned that ”governments and more digitally-aware populations might ultimately prefer to go with CBDCs,” instead of relying on the decentralized nature of BTC. Furthermore, some potentially harming legislative frameworks developed by world regulators could reduce digital assets’ chances of serving as international payment instruments:

”A widespread introduction of CBDCs accompanied by higher regulation of cryptocurrencies could create a more challenging environment for crypto assets as some of their advantages compared to traditional financial assets would fade in the longer term.”

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You Might Also Like:


Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cryptopotato.com/cbdcs-are-not-that-stable-and-may-eventually-kill-bitcoin-says-financial-expert/

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Blockchain

Bitcoin Price Hit 11-Week Low: BTC Retesting The Lowest Weekly Close Since February

Bitcoin prices have fallen to their lowest levels since the end of February as momentum wanes and the bears start rousing from their six-month hibernation.

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In early Sunday trading, BTC prices had fallen to their lowest levels for over 11 weeks, hitting $46,700 before a minor recovery.

The last time Bitcoin dropped to these levels was at the end of February during the second major correction of this ongoing rally. A rebound off that bottom sent prices above $60K for the first time in the two weeks that followed.

Later today, Bitcoin is going to close another weekly candle. In case the candle closes at those levels, this will become the worst weekly close since February 22nd, when BTC ended the week at $45,240, according to Bitstamp. Two weeks ago the weekly candle closed at $49,200, which the current lowest week close since February.

Second ‘Lower Low’ For Bitcoin

This time around, things feel slightly different and the bearish sentiment is returning to crypto-asset markets. Since its all-time high of $65K on April 14, Bitcoin has made a lower high and has now formed a second lower low on the daily chart, which is indicative of a larger downtrend developing.

Analyst ‘CryptoFibonacci’ has been eyeing the weekly chart which also suggests the bulls could be running out of steam.


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The move appears to have been driven by Elon Musk again with a tweet about Bitcoin’s energy consumption on May 13. Bitcoin’s fear and greed index has dropped to 20 – ‘extreme fear’ – its lowest level since the March 2020 market crash. At the time of press, BTC was trading at just under $48,000, down 4% over the past 24 hours.

Market Cap Shrinks by $150B

As usual, the move has initiated a selloff for the majority of other cryptocurrencies resulting in around $150 billion exiting the markets over the past day or so.

The total market cap has declined to $2.3 trillion after an all-time high of $2.5 trillion on May 12. Things are still high on the long term view but losses could accelerate rapidly if the bearish sentiment increases.

Not all crypto assets are correcting this weekend, and some have been building on recent gains to push even higher – although they are few in number.

Those weekend warriors include Cardano which has added 4.8% on the day to trade at $2.27 according to Coingecko. ADA hit an all-time high on Saturday, May 15 reaching $2.36, a gain of 54% over the past 30 days.

Ripple’s XRP is also seeing a resurgence with a 13% pump on the day to flip Cardano for the fourth spot. XRP is currently trading at $1.58 with a market cap of $73 billion. The only other two cryptocurrencies in the green at the time of writing are Stellar and Solana, gaining 3.7% and 12% respectively.

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You Might Also Like:


Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cryptopotato.com/bitcoin-falls-to-11-week-low-as-150-billion-exits-crypto-markets/

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Blockchain

Bitcoin Price Hit 11-Week Low: BTC Retesting The Lowest Weekly Close Since February

Bitcoin prices have fallen to their lowest levels since the end of February as momentum wanes and the bears start rousing from their six-month hibernation.

Avatar

Published

on

In early Sunday trading, BTC prices had fallen to their lowest levels for over 11 weeks, hitting $46,700 before a minor recovery.

The last time Bitcoin dropped to these levels was at the end of February during the second major correction of this ongoing rally. A rebound off that bottom sent prices above $60K for the first time in the two weeks that followed.

Later today, Bitcoin is going to close another weekly candle. In case the candle closes at those levels, this will become the worst weekly close since February 22nd, when BTC ended the week at $45,240, according to Bitstamp. Two weeks ago the weekly candle closed at $49,200, which the current lowest week close since February.

Second ‘Lower Low’ For Bitcoin

This time around, things feel slightly different and the bearish sentiment is returning to crypto-asset markets. Since its all-time high of $65K on April 14, Bitcoin has made a lower high and has now formed a second lower low on the daily chart, which is indicative of a larger downtrend developing.

Analyst ‘CryptoFibonacci’ has been eyeing the weekly chart which also suggests the bulls could be running out of steam.


ADVERTISEMENT

The move appears to have been driven by Elon Musk again with a tweet about Bitcoin’s energy consumption on May 13. Bitcoin’s fear and greed index has dropped to 20 – ‘extreme fear’ – its lowest level since the March 2020 market crash. At the time of press, BTC was trading at just under $48,000, down 4% over the past 24 hours.

Market Cap Shrinks by $150B

As usual, the move has initiated a selloff for the majority of other cryptocurrencies resulting in around $150 billion exiting the markets over the past day or so.

The total market cap has declined to $2.3 trillion after an all-time high of $2.5 trillion on May 12. Things are still high on the long term view but losses could accelerate rapidly if the bearish sentiment increases.

Not all crypto assets are correcting this weekend, and some have been building on recent gains to push even higher – although they are few in number.

Those weekend warriors include Cardano which has added 4.8% on the day to trade at $2.27 according to Coingecko. ADA hit an all-time high on Saturday, May 15 reaching $2.36, a gain of 54% over the past 30 days.

Ripple’s XRP is also seeing a resurgence with a 13% pump on the day to flip Cardano for the fourth spot. XRP is currently trading at $1.58 with a market cap of $73 billion. The only other two cryptocurrencies in the green at the time of writing are Stellar and Solana, gaining 3.7% and 12% respectively.

SPECIAL OFFER (Sponsored)

Binance Futures 50 USDT FREE Voucher: Use this link to register & get 10% off fees and 50 USDT when trading 500 USDT (limited offer).

PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to get 50% free bonus on any deposit up to 1 BTC.

You Might Also Like:


Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cryptopotato.com/bitcoin-falls-to-11-week-low-as-150-billion-exits-crypto-markets/

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