DTCC Launches Digital Currency Project

CBDC, DTCC, Project Lithium, DLT

The Depository Trust & Clearing Corporation (DTCC) announced the launch of a new central bank digital currency (CBDC) project Tuesday (April 12).

According to a DTCC news release, the company is developing the first prototype to examine how a CBDC “might operate in the U.S. clearing and settlement infrastructure using distributed ledger technology (DLT).”

Read more: DTCC Offers Guidance on Clearing Treasury Transactions

Known as Project Lithium, the prototype will gauge the benefits of a CBDC and inform the design of DTCC’s clearing and settlement offerings, while also examining how a CBDC could enable atomic settlement, a conditional settlement that happens when delivery and payment are received simultaneously.

“With this prototype, DTCC, in collaboration with The Digital Dollar Project (DDP), hopes to show the direct, bilateral settlement of cash tokens between participants in real-time delivery-versus-payment (DVP) settlement,” the company said.

The Digital Dollar Project is a non-profit led by former U.S. regulators, tech leaders and executives from the consulting firm Accenture — which provides their funding — that is conducting retail and wholesale pilots to evaluate how a CBDC might work across America’s financial infrastructure and social landscape.

“A CBDC could improve time and cost efficiencies, provide broader accessibility to central bank money and payments, and all while emulating the features of physical cash in an increasingly digital world,” said J. Christopher Giancarlo, co-founder and executive chairman of The Digital Dollar Project.

Jennifer Peve, who oversees strategy and business development for DTCC, said the project marks the next step in the company’s exploration of emerging tech like DLT and tokenization.

“Project Lithium will lay the groundwork for the financial community to better evaluate the implications of a CBDC across the trade lifecycle, as interest in this style of funding continues to grow,” Peve said.

See also: House Bill Calls for Creation of Crypto-Less, Privacy-First Digital Dollar

As PYMNTS noted last month, the launch of a U.S.-issued CBDC is far from certain, as neither the treasury secretary nor the chairman of the Federal Reserve has even issued an opinion on the need and desirability of a digital dollar.

However, the discussion has largely assumed that it will be built on blockchain or on DLT, on which bitcoin and other cryptocurrencies are built.