CEO Update

Yesterday, we announced institutional market participants have backed ClearToken’s mission to facilitate institutional adoption of digital asset markets by becoming the first horizontal clearing house for digital assets, with over $10 million in seed investment raised.

Established participants across the trading lifecycle understand the importance of robust financial infrastructure and we are proud to be partnered with a growing list of leading institutional digital asset participants that now includes Flow Traders, GSR, LMAX Digital and Zodia Custody to deliver the benefits of centralised clearing to tokenised assets and cryptoassets.

Institutional demand to access digital asset markets is ever-growing but needs the right infrastructure to ensure that the reliability and oversight of traditional markets is matched in the digital asset markets, and these limitations are being increasingly acknowledged.

I am therefore delighted to have been quoted in today's Financial Times' article which reported on such market concerns "that cryptocurrencies are poorly suited to the rigours of trading" and "that crypto is not well adapted to key market functions such as netting…to reduce settlement risks."

To explain why centralised clearing matters in a decentralised world, and why ClearToken is determined to eliminate its absence from the digital asset markets, we have also released our first white paper, “Creating Financial Market Infrastructure for Digital Assets: Securing Tokenised and Cryptoasset Trading”

A summary of the white paper is provided below, together with an update on our progress towards our initial settlement model and what it entails. To access the full white paper, please visit our website.

We look forward to providing further updates on our progress soon, and in the meantime, feel free to contact me or the team at sales@cleartoken.io with any questions.

Benjamin Santos-Stephens – CEO
ben@cleartoken.io

Roadmap Update

We continue to make good progress along our delivery roadmap outlined earlier in the year and are working with our main technology partners to build the core infrastructure around their market leading platforms.

Technology and operational integration with our initial participants for DvP Settlement is also well underway with the expectation that we will shortly enter UAT and operational readiness preparations for our initial offering.

Engagement with regulators regarding submissions for the relevant approvals has been positive, and we remain on track to receive the necessary authorisations to meet our objectives. ClearToken intends to be fully regulated in the UK and has initiated the process of obtaining clearing house recognition from the Bank of England, with the intention of launching CCP services in 12-18 months. During 2024, ClearToken intends to launch preliminary settlement services, subject to the receipt of required approvals from the Financial Conduct Authority and Bank of England.

White Paper:

Examining The Institutional Need for Centralised Clearing in Digital Assets

We are proud to announce the publication of our first white paper, ”Creating Financial Market Infrastructure for Digital Assets: Securing Tokenised and Cryptoasset Trading”.

Successful settlement underpins every trade in any marketplace, and digital assets are no exception. Neither the philosophy of decentralised finance nor its implementation through blockchain and other decentralised ledger technology (DLT) can solve for fundamental market requirements, nor does their adoption force a market to become decentralised in every aspect.

The lack of central clearing in digital asset markets means that all trading is bilateral. This creates capital inefficiencies and high risk of exposure to unregulated counterparties and failure of trades.

Centralised clearing is proven to be essential for the smooth operation of traditional markets because it ensures settlements complete and confers other benefits to participants, including netting (up to 98% reduction in settled quantities), improved capital allocation and risk mitigation.

As Flow Traders’ Global Head of Risk, Tamara Maris-Mravunac says:

“For institutions, risk management when entering the digital asset space can be challenging. By leveraging the benefits of the traditional finance ecosystem, particularly central clearing, it provides counterparties with the ability to mitigate their risk and ensure they can operate within their risk appetite framework.

Flow Traders believes ClearToken’s central clearing solution will contribute to improving the digital asset market structure, effectively addressing some of today's challenges.”

Market participants should not forgo the traditional benefits of centralised clearing when seeking to access decentralised finance. Without the right market infrastructure, market liquidity is compromised, limiting the potential of the new generation of digital assets.

ClearToken intends to offer a fully regulated central counterparty (CCP) to transpose the tried and tested principles of clearing and settlement in traditional finance to digital asset market structure.

Read the White Paper on our Website

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www.cleartoken.io