ClearToken's FCA-Approved System Aims to Unify TradFi and DeFi Ecosystems

ClearToken, a London-based digital financial market infrastructure firm, has secured authorization from the U.K.'s Financial Conduct Authority (FCA) to launch CT Settle, a delivery-versus-payment (DvP) settlement system for cryptoassets, stablecoins, and fiat currencies, as reported by Coindesk. This development marks a pivotal step in addressing capital inefficiencies and counterparty risks that have long plagued institutional trading in digital assets. The platform eliminates the need for pre-funding collateral, enabling simultaneous asset and payment transfers, thereby freeing up liquidity for market participants, according to a Finextra report.

CT Settle's design mirrors traditional financial infrastructure, such as the CLS Bank's foreign exchange model, by establishing a regulated clearing and settlement layer for digital assets, as Coindesk noted. The system operates on an "unmargined" basis, allowing for cross-market netting of positions across exchanges and over-the-counter (OTC) trades. This approach reduces operational burdens on treasury and operations teams while centralizing instruction management across custodians, Finextra explained.

ClearToken's CEO, Benjamin Santos-Stephens, emphasized that the service directly tackles credit risks and capital constraints, which have hindered institutional adoption of crypto markets, as detailed in an Assetservicing Times article.

The FCA approval positions ClearToken as a key player in building a "horizontal" market infrastructure, agnostic to trading venues or custodians, according to Finextra. The company, backed by investors including Nomura's Laser Digital, aims to extend its services to tokenized securities through the U.K.'s Digital Securities Sandbox and introduce a central counterparty clearing house (CCP), pending Bank of England authorization, as reported by Coindesk. Niki Beattie, ClearToken's chair, highlighted that the authorization provides the governance and operational resilience needed to attract institutional capital, aligning with the U.K.'s broader goal of establishing itself as a global hub for digital asset innovation, as described in the Assetservicing Times piece.

The milestone comes as the U.K. regulatory landscape tightens for crypto firms, with ClearToken joining X Capital Group as one of two new licensed providers added to the FCA's registry this month, according to Coindesk. The company's cloud-based infrastructure is designed to support 24/7 digital markets, offering legal certainty akin to traditional financial market infrastructures (FMIs). By separating execution and custody, CT Settle grants institutions flexibility in choosing execution venues and custodial solutions, a feature critical for scaling tokenized asset trading, Finextra noted.

ClearToken's roadmap includes expanding its post-trade services to securities and derivatives, subject to central bank approvals. The firm's phased approach—starting with DvP settlement, advancing to CCP, and eventually tokenized asset services—reflects a strategic effort to unify traditional finance (TradFi) and decentralized finance (DeFi) ecosystems, as Finextra reported. With the digital asset market facing challenges in governance and risk management, ClearToken's regulated framework could serve as a blueprint for mainstream adoption, bridging gaps between innovation and institutional trust.

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