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Security Dematerialization

This documentation provides an overview of the evolving landscape of security tokens, with a particular focus on dematerialisation, the role of Central Securities Depositories (CSDs), and how Dusk, having applied for the DLT-TSS license, is set to play a significant role in this space.

Dematerialisation and the Role of CSDs

With the increasing digital transformation in the financial sector, dematerialisation has become a critical process. It involves converting physical securities into digital form, facilitating efficient and secure electronic trading.

Role of CSDs

  • CSDs are pivotal in managing electronic securities, ensuring secure and efficient transfer of ownership.
  • Traditionally, CSDs have been centralized entities responsible for immobilizing paper certificates and managing electronic book entries for securities trading.

Dusk’s Position in the DLT-TSS Ecosystem

Dusk, with its application for the DLT-TSS (Distributed Ledger Technology - Trading and Settlement System) license, is positioned to operate as a CSD, directly engaging in post-trade processes.

Dusk’s Role as a CSD

  • By operating as a CSD, Dusk will manage the electronic holding and transfer of securities.
  • Dusk’s role extends to ensuring the integrity of securities transactions and maintaining accurate records of ownership.

Advantages of Dusk in the DLT-TSS Market

  • Cost-Effectiveness: Dusk offers a more economical solution for the settlement of securities compared to traditional centralized systems. The operational costs are reduced significantly due to minimal transaction fees, primarily constituting negligible gas fees.
  • Operational Efficiency: Dusk’s use of distributed ledger technology enhances the efficiency of post-trade processes, offering near-instant settlement and reduced counterparty risks.
  • Regulatory Compliance: With the DLT-TSS license, Dusk aligns with regulatory frameworks, ensuring secure and compliant operations within the financial ecosystem.

Transformative Potential

  • Dusk represents a significant step forward in the financial sector, leveraging public, permissionless, and privacy-preserving ledger technology.
  • This approach provides a transparent, secure, and efficient platform for securities trading and settlement, aligning with the evolving demands of the digital economy.

Future Outlook

  • With the likely phasing out of the STAK trajectory by regulators, Dusk’s model presents a viable and advanced alternative for companies and financial institutions.
  • The integration of Dusk in the securities settlement market signals a move towards more accessible, secure, and efficient financial operations.