Digital Asset Securities Control Principles: A Framework for Adoption
A new white paper from DTCC, Clearstream, Euroclear and BCG outlines the Digital Asset Securities Control Principles, serving as a blueprint to navigate the current challenges and foster the successful adoption of digital asset securities.
During the Clearstream Roadshow 2024, Renée Berman, Managing Director, DTCC Digital Assets, described how last year’s white paper, Advancing the Digital Asset Era, Together, highlighted obstacles to industry adoption of digital assets that included siloed activity with limited operability, a lack of cash on chain solutions, and few standards.
To help move the industry forward, Berman said, “We took this as an opportunity to develop and expand a core set of principles, risks and controls associated with digital asset securities which DTCC had initially developed. Through our collaboration with Clearstream, Euroclear and BCG, we expanded the framework to ensure it was robust, comprehensive and global in nature.”
The new white paper lays out a comprehensive framework for digital asset securities that identifies 30 specific risks and 50 controls to mitigate those risks ensuring that the environment for digital asset securities is as safe and secure as the environment for traditional securities, with the same degree of trust.
Greg Rodeheaver, Clearstream Head of Sales and Relationship Management, Americas, noted that institutional adoption of digital assets is at an inflection point. “Clearstream, DTCC and Euroclear, are looking to drive further adoption and although there are many digital initiatives, these platforms are not interoperable nor scalable,” he said. “As the rails of the market, financial market infrastructures (FMIs) are used to working in highly regulatory environments and are the most adept to bring the industry together to develop an ecosystem that offers scalability and resiliency. FMIs provide trust in traditional markets and Clearstream, DTCC and Euroclear hope to develop a future digital ecosystem that delivers the same or higher set of standards and trust.”
The principles laid out in the paper are asset class and technology agnostic. By sharing these principles with internal risk teams, clients, and regulators, the firms are hoping to help drive adoption of digital asset securities. In addition, they envision that the control principles can serve as a baseline to drive the conversation around standards within the industry.
Berman concluded, “Our call to action is for firms to read the white paper, apply the framework to your internal digital asset security activities, engage with us and provide feedback. We are seeing tremendous interest in the paper and anticipate having a library of case studies as we continue to apply the principles to the work we are doing.”
