- The UK Financial Conduct Authority (FCA) authorization paves the way towards building “horizontal digital assets settlement service and clearing house”
- The soon to be launched CT Settle service will support crypto assets, stablecoins and fiat currencies
ClearToken, a digital financial market infrastructure firm, announced it has received FCA approval to launch its Delivery versus Payment (DvP) net settlement system, a first step towards its goal of a horizontal market infrastructure for global digital assets clearing and settlement.
ClearToken’s DvP post-trading net settlement system, CT Settle, will be launched for digital assets on a unmargined basis, focused on eliminating settlement (Herstatt) risk, and addressing the fundamental challenge of capital inefficiency in a predominantly pre-funded trading environment.
Market benefits
ClearToken’s CT Settle DvP platform adopts a horizontal model agnostic to trading venues and custodians, operating a regulated settlement service for the spot crypto and stablecoin market, similar in concept to CLS in FX markets.
By eliminating costly first-funding requirements and reducing prefunding, clients can free up vital liquidity. The new settlement system creates a more disciplined settlement environment, reducing counterparty risk through streamlined workflows that respect traditional cycles. CT Settle also tackles operational drag by centralizing instruction management across all custodians and accounts, which in turn slashes the burdens on operations and treasury teams.
It facilitates cross-market netting, which consolidates positions from multiple sources, including both exchange and OTC trades. The infrastructure, which is cloud-based and fully market-ready, has been designed and built to support the demands of 24/7 always-on digital asset markets.
Benjamin Santos-Stephens, CEO of ClearToken, said in a statement: “The launch of CT Settle, our regulated DvP service, directly addresses the credit risks and capital inefficiencies that have constrained the growth of institutional digital markets. More fundamentally, this establishes a solid, trusted, and regulated foundation that is essential for the market to realize the promise of tokenization.”
Niki Beattie, chair of ClearToken, said in a statement: “This is the catalyst that will allow digital assets to be adopted at scale. The introduction of governance, credibility, and operational resilience that comes with being a fully regulated UK institution means that serious institutional capital can now move with greater confidence into these markets.”
Next steps
Following the authorization, ClearToken is progressing with its Phase 2 objective: the establishment of the ClearToken Central Counterparty (CCP) and as a Recognized Clearing House (RCH) subject to Bank of England approval for additional products, risk mitigation, and cross-product margining. ClearToken’s long-term objective (phase 3) is to extend its services to all asset classes, including tokenized securities, for which it is participating in the Bank of England’s Digital Securities Sandbox.