Wall Street Giant DTCC Launches Private Blockchain in Big Crypto-Milestone for TradFi

Depository Trust & Clearing Corp. (DTCC) is a quiet giant on Wall Street, processing basically every trade in the more than $40 trillion U.S. stock market.

It just officially joined the crypto-revolution, announcing Monday that it began live testing of a private blockchain to see whether it's up to the challenge of clearing and settling transactions in the world's largest equities market. The Project Ion platform now processes more than 100,000 trades per day on average, and almost 160,000 on peak days.

That's a drop in the bucket for an industry that measures daily volume in billions of shares, but it's also one of the biggest milestones yet in traditional finance's years-long march toward embracing the ledger technology underpinning bitcoin BTC$89,663.87 and the rest of the cryptocurrency ecosystem. Project Ion was launched as a pilot program in 2020 and moved into a development program in September.

Settling stock trades in the U.S. currently takes two days, a glacial pace compared with cryptocurrencies. That relative sluggishness stands out in an era when stock trades are often get measured in billionths-of-a-second time scales. During feverish trading of meme stocks early last year, Robinhood restricted trades in some of them because of a $3 billion collateral request from DTCC, which stockpiles money as a safeguard in case something bad happens during the two days it's processing a trade.

The U.S. Securities and Exchange Commission (SEC) has proposed speeding up stock settlement times to something called T+0 – jargon for processing trades the same day they're executed. Last year, Robinhood (HOOD) CEO Vlad Tenev said that T+0 would've prevented volatile markets like those seen with meme-trader favorites GameStop (GME) and AMC (AMC).

Major Wall Street players have for years been experimenting with blockchains. The former president of the New York Stock Exchange told the Wall Street Journal in a story published Monday that "blockchain technology is going to rewire all financial services."

DTCC said its conventional system for processing trades remains in effect; trades on its private blockchain are being handled in parallel.

The DTCC project, which is private and permissioned unlike many traditional blockchain networks such as Bitcoin and Ethereum, is being developed with firms including Barclays (BCS), BNY Mellon (BK), Charles Schwab (SCHW), Citadel Securities, Citigroup (C) and Credit Suisse (CS). DTCC partnered with software providerR3 to launch Project Ion using R3's Corda distributed ledger technology (DLT) software.

"Digitized assets and emerging technology like DLT are shaping and evolving the financial services landscape, and we remain committed to advancing innovative solutions that capitalize on opportunities, deliver new value and drive the industry forward," said Murray Pozmanter, managing director and president of DTCC Clearing Agency Services.

Read more: Financial Services Company DTCC Working With Digital Dollar Project on CBDC Prototype

UPDATE (August 22, 15:46 UTC): Updated with additional context throughout.

UPDATE (August 23, 19:17 UTC): Updated with additional context throughout.