Committed Settlement: Digital Asset’s DLT-based collateral management tool
Digital Asset has developed a tool to streamline the process of creating and maintaining security interests over assets held or evidenced on a distributed ledger.In a new report, Linklaters teams up with Digital Asset to consider the key legal and regulatory issues relevant to its adoption under English law.
What is Committed Settlement?
Committed Settlement is a mechanism developed by Digital Asset using its smart contract language DAML™. It is designed to enable assets held or evidenced on a distributed ledger to be “locked” and transferred in accordance with the terms of a security arrangement, thereby automating the functions of a control account.
Digital Asset envisages that this tool has the potential to fundamentally alter the financial industry by, for example:
- eliminating significant operational burdens involved in creating control accounts;
- eliminating operationally intensive post-trade reconciliation processes; and
- streamlining and enhancing reporting functionality.
Key legal and regulatory considerations
There are a number of legal and regulatory considerations that will have a bearing on the efficacy of Committed Settlement in the financial markets – notably the impact of insolvency and related laws. We consider the key issues from an English law perspective in our report. If structured and deployed appropriately in light of these considerations, it should be possible for financial markets to utilise Committed Settlement supported by an English law framework.
Read our full report.