- DTCC and Chainlink completed a pilot for tokenizing finance fund data with major U.S. banks like JPMorgan.
- The Smart NAV Pilot utilized Chainlink’s CCIP to standardize the distribution of NAV data across blockchain platforms.
The Smart NAV pilot was an initiative to extend the DTCC’s Mutual Fund Profile Service I (MFPS I), which is the standard method for transmitting “Price and Rate” data, also known as “NAV data.” DTCC, in collaboration with Chainlink and ten market participants, conducted this pilot to assess the practicality and value of using Distributed Ledger Technology (DLT) for distributing price and rate information.
One of the key findings from the report showed how Chainlink #CCIP serves as an open blockchain interoperability standard to prevent future fragmentation by providing a secure abstraction layer between DTCC and blockchains. pic.twitter.com/KL0IvIbe8r
— Chainlink (@chainlink) May 16, 2024
The goal was to explore potential advantages and encourage innovation in asset management by providing a DLT-based solution for data dissemination.
Depository Trust & Clearing Corporation (DTCC)
The Depository Trust & Clearing Corporation (DTCC), in collaboration with Chainlink, has completed a pilot program aimed at tokenizing traditional finance fund data. The pilot involved U.S. banks such as JPMorgan and BNY Mellon, and focused on integrating net asset value (NAV) data from various funds onto blockchain platforms using Chainlink’s Cross-Chain Interoperability Protocol (CCIP).
The initiative, termed the Smart NAV Pilot, was designed to standardize the method of disseminating NAV data across blockchains. The DTCC’s report from May 16 indicated that the pilot successfully delivered structured data on-chain and established standard roles and processes. These developments are expected to facilitate the creation of tokenized funds and smart contracts that manage data for multiple funds.
We’re excited to share the results of a new Smart NAV industry pilot between @The_DTCC, Chainlink, and 10 of the world’s largest financial institutions that delivered key mutual fund data onchain.
Full report: https://t.co/ob3K0s4g86
The significance for fund tokenization 🧵 pic.twitter.com/74zocXa2s0
— Chainlink (@chainlink) May 16, 2024
The DTCC report further noted that the pilot program improved automated data management and had minimal impact on the existing market practices of traditional financial institutions. It also enabled easier access to historical data and provided broader API solutions for price data, improving efficiency.
The pilot demonstrated how DTCC and Chainlink can make net asset value (NAV) data available across virtually any private/public blockchain.
This enables automated data dissemination and historical data access, which unlocks a multitude of use cases around fund tokenization. pic.twitter.com/oi4yRxNhSb
— Chainlink (@chainlink) May 16, 2024
“found that by delivering structured data on-chain and creating standard roles and processes, foundational data could be embedded into a multitude of on-chain use cases, such as tokenized funds and ‘bulk consumer’ smart contracts, which are contracts that hold data for multiple funds,” the report reads.
Participating in the pilot were several U.S. banking and investment firms, including American Century Investments, Edward Jones, Franklin Templeton, Invesco, MFS Investment Management, Mid Atlantic Trust, State Street, and U.S. Bank. This diverse participation underscores the interest in and feasibility of applying blockchain technology within conventional financial operations.
Future expansions in blockchain applications
The pilot’s completion coincides with a broader trend towards the acceptance of real-world asset tokenization within the traditional financial sector. Notably, BlackRock launched a tokenized money market fund on the Ethereum network in March, named BUIDL.
This fund issues tokens representing shares that invest in stable assets like U.S. Treasury bills, aligning traditional investment practices with modern blockchain technology. The success of such initiatives indicates potential future expansions in blockchain applications within finance, streamlining processes and enhancing the accessibility of financial data.
