Dear Member,
The Depository Trust & Clearing Corporation (DTCC) is an interesting and unique American company. In essence, this giant keeps records of who owns which stocks and bonds.
Before the DTCC – and its predecessor, the Depository Trust Company (DTC) – was established, stock ownership was recorded on paper certificates. When someone bought or sold a stock, the actual physical certificate was transferred to the new owner. This was inefficient and horribly complex.
Enacademic describes the chaos that occurred during the 1960s this way:
| Stock certificates were left for weeks piled haphazardly on any level surface, including filing cabinets and tables. Stocks were mailed to wrong addresses, or not mailed at all. Overtime and night work became mandatory. Turnover was 60% a year. |
So the DTC, and later the DTCC, was created to centralize storage of paper ownership certificates and make it simpler to buy and sell stocks and bonds.
Today, the DTCC is a giant. In 2011, the organization settled around $1.7 quadrillion worth of value worldwide, according to the DTCC 2011 annual report.
Tokenization – The Next Step?
The DTCC has proved to be a (somewhat) effective solution for keeping track of stock and bond ownership.
But many of us believe that the next step in tracking securities ownership is blockchain-based systems. Blockchains are ideal for this application. And believe it or not, DTCC President Mike Bodson seems to agree.
In a recent interview with Traders Magazine, Bodson said the following (emphasis mine):
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2020 will be a year dominated by the impact of geopolitical events, digitization and tokenized securities…
One of the top issues the industry and regulators will need to address is developing rules for the post-trade processing of tokenized securities to protect market stability. |
Our portfolio token, ravencoin, is one of the leaders in the tokenization space. It has built an impressive decentralized tokenization platform, without an ICO or presale of tokens. It’s one of the most promising token projects out there today. If you aren’t familiar with the project, you can start learning more here.
Another interesting thing happening in the tokenization space is Overstock’s tZERO platform. Among other problems, tZERO is looking to solve the problem of “naked short sellers” in the stock market. You can learn more about tZERO’s approach here.
I am convinced that the tokenization of securities has a bright future. Whether either of the platforms we mentioned here will succeed is hard to say, but I’d say they’re definitely among the leading contenders at the moment.