Good morning everyone and a big thank you to Karartik and the rest of the ETH comp and ETH global team for really supporting us and, uh, for all of us being present for this important conversation. I've had the pleasure of working with Gianna for many years now, and I've also seen her career, uh, really progress, and, very importantly, she's made, uh, such important steps in institutions. Uh, for those of you who don't know the Linux Foundation Essentialized Trust, uh, for the last 10 years at the Linux Foundation we've been home to important blockchain interoperability projects, uh, cryptography, and really educating and engaging institutions and businesses along the way. Uh, you know, we have a few questions. We want to have this conversation with Gianna because she is really at the center, along with DTCC, where a lot of this work is happening.
And if you don't know DTCC And if you don't know DTCC , they are the hub of post-trade infrastructure for what is arguably the world's largest capital markets here in the US. And they also collaborate globally with other FMIs, um. So for many people in the web 3 community, computing is always described, or sometimes described, as something new. But, uh, Wall new. But, uh, Wall Street, and we've been sitting here Street, and we've been sitting here in New York for decades, uh, we really have a solid settlement infrastructure.
Uh, and this is where Jonah and the rest of her team are. So let's start with what the role of DTCC is today. Er, and what really needs to evolve as markets become more digital, more programmable, and tokenized. Well, thank you very much, Daniela, for such a generous opening statement. And I think that, uh, it's appropriate that you and I have a little...
let's see if everyone can hear me? Okay, I think there was a little feedback. Uh, I think you and I are having this conversation, uh, here today. So, I chair the LFDT board of directors . Um, I spent years at Consensus before I came to DTCC, and regulation to DTCC, and regulation is something that I, you know is something that I, you know , thought about on both sides of the fence.
Um, so I'd like to talk about the significance of DTCC, what needs to be developed and, you know, how we develop. I think develop. I think this is really important. Um, simply put, DTCC processes $4.7 quadrillion worth of securities per year.
Um, that's trillions of dollars a day. Um, that's hundreds of billions of dollars an hour. Um, and so we also provide custody of over a hundred trillion dollars worth of assets in over 150 countries. Um, and so every trading day we, you know, we compress risk, we minimize exposure. Um, we're freeing up capital on a scale that really no other centralized or decentralized organization can really match right now.
And this will not go away. Okay, thank you. Thank you. This will simplify the situation. See, can everyone hear me?
Thank you. I hope this simplifies things a bit. Hmm, this isn't going anywhere . Hmm, but of course it has to evolve, right? So what we're hearing from the market is that, hearing from the market is that, you know, the markets want us to move faster.
They want to move towards 24/7 operations, collateral mobility, continuous trading, um, you know, settlement finality. Eh, they want programmability. The market demands a lot , and there is a lot we are working on. Um, but, you know, so the role of DTCC is not static. Um, and to be honest , she's never been like that.
So we're actively building a bridge between the infrastructure that Wall Street already trusts and the digital infrastructure that, you know, everyone in this room is already building. Um, I think we just got a no-action letter from the SEC in 2025 that says we're authorized to tokenize, uh, assets, real assets with the same investor protections that we offer in the trading world. So we are very happy about this. We plan to soft launch the production-ready solution in July, and also fully launch it in October. So we are very happy about this.
I think evolution is not just about replacing trust with code. It is about making trusted infrastructure programmable and interoperable. This also addresses real market needs. Hmm, and these numbers are always very impressive. Hmm, and I don't think there 's ever a whiteboard long enough to actually write all those zeros.
I think some of you have numbered it. Um, and you know what I think is really important is that when people talk about digital assets, they often focus on trading, uh, insurance, or custody, especially in the world of cryptocurrency, but settlement is where the trust risk and finality really come together, that's where the focus is . Why is settlement such a critical level of market infrastructure? That's a great question. I've thought about this a lot.
I think you know why settlement matters ? This is actually where promises become reality. Um become reality. Um , you know, a deal is just a deal until it's settled. And when you think about what a centralized, uh, clearing house actually does, you know, when two parties trade, uh, DTC, uh, NSC acts as the central counterparty, and we net net settle those trades.
So for every, you know, $100 of gross liabilities, firms need to invest, you know, finance only a portion of that amount. Uh, and this netting has freed up hundreds of billions of dollars of capital, uh, you know, every day, and especially during the T+1 transition. So these are operations on a huge scale huge scale . Um, and I think the settlement itself is also where a lot of the unglamorous action happens. However, it is important that this is where corporate actions take place.
This is where governance failures occur. Funding alignment–all these, you know, critical issues that, you know, determine the integrity of the market. So I think if you fail, everything you know up the chain essentially fails as well. Right. Yes.
So what do you think most people outside of post-trade misunderstand the most about settlement? For example, what people in the room might hear and the conversations you're having, because it's very complicated. You know, it's like plumbing sometimes, isn't it? What do most people misunderstand about this? I think most people misunderstand that this is actually resolved, right?
Um, you know, you think DTCC is kind of a boring, uh, company. About 50 years have passed. It's a fixed utility, but, uh, you know, once you get inside, it's actually incredibly dynamic. Um, we just moved the entire US market from T+2 to T+1 in 2024. It was a massive coordinated effort.
Um, Europe is also moving towards T+ 1, and we're already looking at how to support almost continuous, uh, settlements. I think another misconception is that decentralized systems have completely solved the settlement issue, uh, you know, just because transactions can be confirmed in seconds. But finality in blockchain is not the same as institutional settlement, where institutional settlement includes ownership transfer, clean funding, corporate actions, rights, regulatory reporting, and many other things that I think a lot of people have n't thought about, especially when you have the strict constraints that a regulated institution has. I think atomic settlement is a very elegant concept, but when you're managing a quadrillion dollars with complex asset portfolios, you need robust netting, you need fault management, you need capital productivity mechanisms , and, you know, it's always very impressive. Everyone we've talked to over the years is always on the path of innovation, and always says that this is what we need to achieve today for the brand to really function and continue to operate effectively and efficiently.
But that's exactly what we need to do because we know that digital assets and tokenization have already disrupted our business and we need to continue to innovate. Hmm, but I'm sure it's because I often see you, Gianno, on my board of directors, so we communicate constantly communicate constantly . Hmm, and there are a lot of things that need to be agreed upon, uh, across the market. This does n't just apply to DTCC n't just apply to DTCC . These are hundreds of your customers.
How many clients are part of, you know, how many banks are part of DTCC now? Many. Hundreds. Hundreds. Right.
So, coordinating all of this. So, what are the biggest pain points in today's market in structure? I would say there are two, there are two really big pain points. One pain points. One is collateral mobility, and the other is collateral mobility, and the other is fragmentation.
And they are ripe for destruction. Hmm, collateral mobility without a doubt. And I think without a doubt. And I think most people considering using financial institutions would agree with that as well . We are working very hard on this.
So today, when you look at how collateral moves between jurisdictions, it's opaque, it's complicated, it's expensive, and you know that firms have capital that is completely locked up because they can't mobilize it effectively . Um, that's why we're launching our supply chain application, built on Hyperledger, as you know, within LFDT, and it allows you to manage supply 24/7, almost in real time. And our research actually suggests that intraday funding costs can be significantly reduced and a significant amount of capital freed up at large dealer banks. So, that's one. I think this is a very obvious use case.
And the second is fragmentation, because now you have several DT networks. We can choose from hundreds. But we don't want to create the problem of simply reproducing isolated networks. Um isolated networks. Um , so compatibility will really be a top priority to address in the future.
Good. So I hear from you a world with multiple chains. And you need to have interoperability, otherwise the fragmentation will continue, and it won't solve any of the market problems as the markets continue to grow. Um, you know, in terms of assets, let's talk specifically about how they're becoming more and more digital, okay? Um, and you mentioned this earlier, DTCC, for those who don't know, um, and I'll say I'll tell you a funny story.
So funny story. So , um, when you got the letter from the SEC, um, your November deadline, right? Um, someone wrote to me on LinkedIn, and, um, I'll call it my cryptocurrency, one of my crypto brothers. I say this with love, of course, and I love them of course, and I love them . Um, and one of the things they said was, "Hey, you know, DTCC is awake now, right awake now, right ?
They seem to understand that." And I laughed a little bit and said, " and said, " Look, DTCC has been at the negotiating table for the last 10 years. Um, you, DTCC, have actually been on our board for the last 10 years, and you've really been thinking about this moment thinking about this moment where we're in the markets, and also preparing for it. So as assets become more and more digital, what parts of the current system should be preserved, right? And which parts are just ready for a redesign?
Yeah, that's a great question. I'm really glad you brought up the fact that we've actually been innovating, uh, for a long time, and we were there at the founding meeting, uh, for Hyperledger Basu. Uh, I wasn't there, I wasn't at DTCC at the time, but, uh at DTCC at the time, but, uh , you know, there's a great legacy there, and we're very excited to, uh, support LFTT. Uh, so I think the three things that absolutely should be preserved are legal certainty legal certainty , uh, ownership, risk management, uh, that's extremely important, and operational resilience operational resilience , uh, resilience. So markets need accountability, uh, they need someone to stand behind the resolution guarantee.
Okay? Especially when you're, uh, in a highly regulated system. Who is the SEC going to talk to if the resolution fails? They're not going to talk about, you know, necessarily a decentralized system where there's no owner. Um, so they need an infrastructure that, uh, works even during extreme market events.
Um, and we've, you know, invested deeply in that. Um, what's ready for redesign? I think what's ready for redesign is how, and everyone you know in this room is probably very excited about that. How long, uh, the settlement takes, how assets are moved assets are moved , uh, how collateral is mobilized , uh, how corporate actions are processed, uh, how you know markets work in different time zones. I think that's, um, something that needs to be changed and reworked.
Tokenization obviously allows us to reimagine those workflows, and it's really, you know, inspiring. So instead of the old way of doing things like batch, um, nightly processes, we can have real- time transfers. Um, instead of assets being locked on one network, they can be compatible, and we can have cross-chain distribution. Um, instead of having market hours limiting our operations, we could have 24/7 operations. That's really exciting.
This month, we're expanding our clearing windows to support 24/7 night trading, and that's a direct response to market demand. But I think this point is critical, which is that the redesign the redesign , I think, should complement the existing infrastructure, not necessarily completely tear it out, because trillions of dollars are built into our existing infrastructure in the modern system, so, you know, wholesale replacement is probably unrealistic and probably irresponsible. So we need to think carefully about how to surgically implement these systems. Tokenization adds another layer of flexibility, you know, connectivity to public networks, programmable assets, you know, real- time collateral optimization, and I think firms can adopt it without necessarily completely re-engineering everything in their operating systems, meaning taking certain steps that will help you achieve this without changing everything at once, and I think a lot of people in the web 3 space don't understand that these institutional structures of infrastructure, you pull one thread, and a lot of other things can fall apart. So, DTCC is always very mindful of that.
So you're the head of innovation, technology and research at DTCC. Um, and I've always thought that you know innovation sometimes adds complexity and sometimes innovation, you know, obviously accelerates what a company and an organization wants to do. So how do you separate this dilemma from innovations that just solve, you know, the complexity that's cutting across DTCC functionality? Yeah, that's a good question, right? I think we need to ask one question, which is, is this solving a problem?
Um, are we tokenizing for the sake of novelty? We don't want to tokenize just for the sake of tokenization. And I think we've made it very clear internally, um, that we're applying tokenization where it really brings measurable benefit. And so, you know, some of the use cases that I talked about earlier, collateral mobility, huge value, um, 24/7 settlements, there's a clear demand for, um, liquid assets and 24/7 settlements, um, faster cross-border transfers. There are obvious pain points that need to be reduced.
So, you know, we want to start with those use cases where it really makes sense. These are problems that people have been talking about since maybe 2016. Um, you know, they not new, but they're certainly known, and they can have a significant impact. Um, each use case is going through a pretty thorough analysis as to what the operational benefit of that is. Um, you know, we're seeing more pilots and production activity around tokenized fund collateral that we talked about earlier, treasury bonds, private assets, really across the board.
Um, from your perspective, where is tokenization most likely to create value first? Yeah, I think there are three areas where you're going to see probably the most value, and that's where you really see the transition from pilot to production. Um, production. Um, first, treasury bonds and highly liquid securities. So the SEC's no-action letter actually allowed us to tokenize the components of the Russell 1000 ETFs that track major indices, as well as treasury bills treasury bills , bonds and notes.
So those are assets where we already have deep liquidity, um, on DTC. It already exists on DTC. So we're not creating new markets from scratch. We're just, you know, making the most liquid assets in the world programmable and accessible. Um, I think the second one is collateral.
So, research projects research projects that, you know, have tokenized collateral can unlock billions in capital efficiency. As we, uh efficiency. As we, uh , as we were saying, yes , as we were saying, yes , digital forms of bonds, and, you know, money market bonds and cash moving in almost real time, it's just...it's... time, it's just...
it's... gamer, and, uh, I think I mentioned intraday repo on digital rails; we calculated that it could significantly reduce the cost of funding. And our great collateral experiment, if anyone is familiar with our great collateral experiment that we did back in 2024. Um, it really highlighted that concept, and now the collateral application chain will be launched in the fourth Q1. Um, I think the third one is cross-border trading with an extended schedule, because obviously tokenization makes assets portable, um, accessible.
So when a treasury token can exist on one network for permissioned workflows and on another network for public distribution, you start to break down all these geographic and time zone barriers time zone barriers . Okay. So if tokenization is primarily about faster settlement, which is always what the market demands, better collateral mobility, which is critical to being able to do that, broader access or new products. What do you think is the best focus in terms of faster settlement, better collateral mobility, broader access or new products? Are you tasked with all of that?
Donno, I think, I mean, I think I would say, you know, it's all of the above. Um all of the above. Um , you know, there's the immediate value of operational efficiency and, you know, collateral mobility. That, you know, kind of the bets on the table. They are the foundation.
Um, so I think, you know, it's a matter of consistency. Um, so new products, um, you know, they will come as soon as the fundamental infrastructure, the fundamental system, is built, and that would include, you know, um, 24/7 fractional ownership, by7 markets 24/7 fractional ownership, by7 markets , you know, compounded financial instruments, etc. But really, you know, the future digital rails of financial markets need to be built, and you need to build that financial infrastructure. Right, and regardless of that, it still needed to be modernized, right? That's what we're doing.
So we're here at ETHCOM, you know, and a lot of the Ethereum audience is the Ethereum audience, and, um Ethereum audience, and, um , you know, they believe, I think a lot of people believe, and some of us believe, that public networks are going to be the essential infrastructure for settlement. I think we're already seeing that they don't believe that, we're already starting to to see that. Um, and what's also, you know, obviously, I've already talked to a few institutions in the room that want to bridge those two worlds, are working on that. So how should the institutions that are here today hear, uh, the speakers at ETHCOM? Uh speakers at ETHCOM?
Uh , how should they think about Ethereum, uh, and other networks in relation to the market infrastructure that DTCC and other, you know, FMIS are building around the world? Yeah, that's a great question. I mean, you know, I'll just be direct. DTCC has a multi-chain strategy. Uh, we're inherently chain-agnostic.
We want to continue to be chain-agnostic by nature. Uh, we're partnering with, uh, you know, publicly partnering with a few networks. Uh a few networks. Uh , as some of you, uh, know, our tokenization service, uh, is partnering with Canton. Uh, we announced a connection to Stellar.
Uh connection to Stellar. Uh , for example, our contact app chain, uh, is built on top of the EVM-based hyperledger. Uh, you know, and we're building it in a way that it's interoperable across, uh, different networks, not locked into one. Uh, you know, we're one. Uh, you know, we're obviously very committed to Ethereum.
Most of our tools are based on the EVM. Uh, and, you know, we've also had a lot of conversations with, uh, a few teams, the Ethereum Foundation, etc. Uh, so I think maybe public networks should think about how, think about how, uh, we evaluate chains. So we actually have a pretty robust, uh, mechanism for evaluating chains. Uh, and it's based on a few criteria.
We have exclusion criteria, we have, uh, business we have, uh, business criteria, and we have technical evaluation criteria. So, you know, the business know, the business criteria that we have, we require customers. If our customers want to build on a particular network, then we, you know, will do our best to accommodate that, but we also look at liquidity and implementation. We also look at the cost of integration, and of course it has to pass our technical evaluation criteria. We have about nine technical evaluation criteria that we look at, uh, quite in depth.
Some of them are performance, scalability, uh, governance, privacy, verified deployments, interoperability, etc. uh, and so I think different use cases can be used on different networks. uh, and that's kind of the thesis about multi-chain. uh, but you know what, what I'll say to the room specifically, you know, especially as someone who's been at Consensus for many years and has worked directly with you, uh, as the chairman of the LFTT board, I'm, you know, very passionate about public networks and certainly, uh, committed to Ethereum. And I think, you know, Ethereum's biggest strength is its huge ecosystem developers, its layout and institutional implementation experience.
I think the implementation experience. I think the only challenge is going to be to show that it can also achieve the privacy and scalability that will be required by, uh will be required by, uh , institutions, and I'm sure you know there's a lot of work already going on in that direction. Yeah, and I'll talk a little bit about Beasu. You know, since 2019 Bezu has been, you know, an EVM under LFDT, which is now known as LFDT, and that's really become the technical standard for most institutional EVM implementations. And you know, the ongoing, you know, decision-making moments around open standards that are openly developed and openly regulated openly regulated is a big decision-making moment for BESU.
And also on the enterprise side, as far as the enterprise level , you have multiple developers, and vendor neutrality is really intended for Beasu really intended for Beasu , where the choice points are. So, you know, let's talk a little bit about the role of open standards and open source. How do you and DCTC view that as a big moment? decision-making when you decide what to build from? Yes.
No, I think it's definitely important. Um, and certainly, you know, in my position and working with you, I think you know I believe in this deeply. Um, and DTCC is also very positive about this. So open source itself is not enough. I mean, code neutrality matters .
Obviously, the ability for institutions to audit, evaluate, and contribute to their code is very important. Um, but open standards are also very important. So we need common token standards, we need interoperability standards interoperability standards , common data standards, etc. So that's really going to be important, and I think the developers in the room are going to play a huge role. Um, you know, when you think about the code that you're writing and the standards that you're proposing and the protocols that you're developing, just remember that, um, institutions, if you're looking for institutional adoption, they're going to be looking for, um, auditability.
They're going to look for resilience. They're going to look for interoperability. So that's what drives institutional trust. Right, and that's a very good, clear message. Right, developers need to be involved in the creation, and I saw DTCC in the room, engineers with attendants and participants doing just that, right, giving you your requirements.
So we have 40 seconds, so when we wrap up, you're already, um wrap up, you're already, um , running a settlement level that Wall Street trusts; I mean, there's no doubt about that , right? So, um, as the market evolves, what's your message to the Ethereum ecosystem, um, and the open source communities that continue to grow around it, in terms of building, um, the next generation of trusted financial infrastructure? I think that's a great question, um, especially given that it's coming from both sides of the world, um, I strongly believe in that. I think we absolutely need each other. Um, you know, DTCC can bring the scalability, the risk management, and the regulatory relationship, and, you know, the trust that's been built, um, with Wall built, um, with Wall Street over the last 50 years.
But the Ethereum community brings this openness and this passion, um, it brings the composition, um, you know, the speed of development, and this desire to make financial infrastructure, um, much more accessible much more accessible . Um, and so I think you know, we're not on opposite sides of the wall. We're building a bridge, maybe with, um, you know, opposing sides, but the sooner we meet in the middle, the better the markets will be for everyone. Yeah. Well, you know, I think the market infrastructure and the web 3 ecosystem are very fortunate to have you, Jeanne, you're a real leader, you know, really driving the conversation in the right direction.
So I want to personally thank you for all the support you for all the support that you've been giving us, um that you've been giving us, um , but first for everything for everything for everyone in this room. So thank you. I also want to thank you very much for your leadership, and you are very generous. Thank you very much. Thank you.
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