ECB to Study DLT Systems in Dealing with Tokenized Securities

The European Central Bank plans to test the capabilities of DLT systems in handling tokenized assets and the digital euro (CBDC) on the D7 trading platform from Clearstream.

Clearstream, the international central securities depository, joined the European Central Bank’s trial to explore the potential of distributed ledger technology (DLT) in wholesale central bank money settlement, considering the use of the digital euro and tokenized assets. The trial will be conducted on the D7 trading platform.

Clearstream is one of the largest international securities depositories. The company has more than €18 trillion in assets under custody and is a subsidiary of Deutsche Börse Group. D7 is a post-trade platform launched by Deutsche Börse in 2021 for trading tokenized securities, directly managed by Clearstream.

The trial aims at exploring digital euro issuance, different payment models and CBDC use cases, and the application of a DvP settlement model for on- and off-exchange transactions using tokenized assets. Besides, there are plans to expand interoperability of DLT systems with the main digital payment solutions available in the Eurosystem.

The press release states that Clearstream expanded the functionality of D7 with the necessary DLT developments based on Google Cloud technologies, made possible thanks to a strategic partnership between Deutsche Börse Group and Google Cloud.

The trials are scheduled to run from May to November 2024. As part of the trials, Clearstream will be connected to all available DLT systems of European central banks, among them are:

• Trigger Solution from Bundesbank;
• TIPS Hash-link from Banca d’Italia;
• Full DLT Interoperability from Banque de France.

Clearstream is a regular participant in various projects aimed at exploring CBDCs, tokenization, and DLT. In October 2022, Clearstream was part of an experiment in which SWIFT representatives managed to combine asset tokenization platforms and different payment systems.

In 2023, Clearstream participated in a SWIFT project to investigate the possibility of combining different blockchains within its infrastructure to eliminate complexities in the settlement of tokenized assets, as well as using the Cross-Chain Interoperability Protocol (CCIP) from Chainlink Labs for this purpose.

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