Over the last six months ClearToken has forged relationships and worked with over 60 industry participants, both from traditional markets as well as new service providers in digital assets, to develop its PoC for the centralised clearing of digital assets. Through in-house developed systems and integrations with leading financial services technology solutions providers, ClearToken has successfully demonstrated that spot digital assets can be captured, novated*, risk-managed, netted and settled using existing market infrastructure techniques.

Partnering with trading venues, market makers, prime brokers, banks, custodians, asset managers and software vendors, ClearToken has simultaneously established a framework to deliver 24/7 risk management and settlement of digital assets and their associated derivatives. PoC participants have provided valuable input into ClearToken’s future rulebook together with the operational principles needed to extend clearing operations to weekend and same day (T+0) settlement - compared to current T+1 and T+2 settlement for most securities markets.

Benjamin Santos-Stephens, CEO of ClearToken commented “We are immensely grateful to the large numbers of industry professionals who have collaborated with us to develop a workable clearing solution for digital assets. The ClearToken team is looking forward to the next chapter, as we work towards launching the first regulated clearing house for digital assets.”

Next steps

ClearToken will be releasing a report into the lessons learned from the PoC to be presented to regulators and stakeholders as part of its authorisation process. The PoC technology systems will also be made production-ready and will form the foundation for future user testing and certification programs.

ClearToken will continue to engage with stakeholders, service providers and proposed clearing members whilst it seeks authorisation as a Recognised Clearing House (RCH). ClearToken has recently responded to the UK Government’s HM Treasury consultation on the proposed financial market infrastructure sandbox, referred to as the ‘Digital Securities Sandbox’, for digital securities settlement, and will continue to progress with industry stakeholders in a similar fashion to the Clearing PoC.

Niki Beattie, Chair of ClearToken commented “We have heard loud and clear that risk management and settlement practices in digital assets are not yet ready for institutional market participation. However, we know that demand is increasing and by working together to adapt well understood existing processes used in traditional market structure, we can create a safe and sustainable market for regulated participants and for the markets of the future.”