ClearToken x FCA: Regulated DvP for 24/7 markets in cryptocurrencies, stablecoins and fiat currencies. In particular, ClearToken reported that its payments entity, ClearToken Depository Limited, has received approval from the UK Financial Conduct Authority to launch its delivery-to-pay net payment service CT Settle, the first step towards a horizontal clearing and settlement infrastructure for digital assets. The company points to the institutional foundations of authorized payment institution status under the Payment Services Regulations 2017 and registration of crypto-asset companies under the Money Laundering Regulations 2017 (MLR 2017) to support DvP payments and tradenetting.
What does CT Settle do?
CT Settle provides true DvP settlement on a no-margin basis and aims to eliminate the Herstatt risk and capital inefficiencies of the model by pre-funding positions on exchanges and OTC. The important point here is that horizontal models operate independently of trading venues and custodians. The service is positioned as a regulated clearing for the crypto and stablecoin spot market, similar to FX’s CLS. The platform centralizes instruction management across all custodians and accounts, aggregates positions from various sources, enables netting between markets, simplifies treasury operations cycles and reduces operational burden.
Why does this speak directly to institutions, which typically face a combination of up-front funding requirements and fragmented operational silos? CT Settle addresses both barriers. Netting reduces the need for pre-funding and frees up liquidity, disciplined DvP reduces counterparty risk, and standardized rules and account structures simplify posting to own and client positions. ClearToken links this to a trust framework for scaling. That means intermediary post-trade infrastructure, separation of execution and custody, and ingestion of trades from multiple trading locations with net settlement to banks and custodians via standard SSI.
CEO Benjamin Santos Stevens said:
“This approval is a significant moment not only for ClearToken, but also for institutional investor participation…The launch of CT Settle, our regulated DvP service, directly addresses credit risk and capital inefficiency…and is essential for the market to realize the promise of tokenization.”
Chair Niki Beattie added:
“This is a catalyst that will enable mass adoption of digital assets…serious institutional investors will be able to enter these markets with more confidence.”
What are the implementation steps?
It’s not so simple here, the strategy has several steps.
- Phase 1. CT Settle has already received FCA approval. Next, ClearToken advances
- Phase 2. Create central counterparty CT Clear and authorized clearing house status, subject to Bank of England approval. This adds products, expands risk management, and adds cross-commodity margin.
- Phase 3. The group plans to extend its services to all asset classes, including tokenized securities, and has already joined the Bank of England’s Digital Securities Sandbox to enable depository functionality and settlement finality.
At the same time, ClearToken emphasizes its compliance with the UK FMI regime and alignment with the IOSCO Principles on Financial Market Infrastructures. The company connects multiple venues and custodians with strict AML/KYC requirements and reports testing the system with key market participants.
conclusion
A regulated DvP netting solution with a horizontal clearing model for spot cryptocurrencies and stablecoins with the option to include fiat currencies promises financial institutions a path to mitigating counterparty risk and freeing up capital without being tied to a specific exchange or custodian. The next steps for CCP/RCH and DSS will determine the depth of integration with legacy infrastructure, with enhanced netting and clearing capabilities key to liquidity and solution efficiency. Stay tuned for the latest updates and opportunities in the new economy, crypto industry, and blockchain development.