24 June 2025
CSDonDLT - Blockchain – Capital Market rEvolution
KDPW is implementing the CSDonDLT project which aims to gauge the impact and added value of implementing solutions based on distributed ledger technology (DLT) in central securities depository services. The first step in this direction is to create a solution to enable the settlement of OTC transactions using blockchain.
The CSDonDLT project and the accompanying White Paper present new current experiences and observations of KDPW regarding the potential and benefits of using blockchain as a supplement and functional extension of the traditional capital market infrastructure.
The White Paper is available on https://www.csdondlt.kdpw.pl/en/index.html
The CSDonDLT project will result in the implementation of an additional complementary layer of the depository and settlement system based on blockchain. At this stage, the solution under development focuses on the settlement of OTC transactions, covering the safe-keeping and unencumbered transfer of securities as well as the atomic settlement of transactions within the DLT layer. Full interoperability of both layers of the depository and settlement system will enable smooth transfers of securities from the traditional layer to DLT and vice versa.
In KDPW’s opinion, blockchain allows to redefine and create new models for the safe-keeping and transfer of assets and to build trust between market participants in a shared and distributed IT system.
“Traditional capital market infrastructure, while effective, efficient and secure, is marked by significant complexity and centralisation of processes. Each transaction requires the cooperation of multiple entities and the reconciliation of data stored in separate IT systems operated by market participants. In this context, distributed ledger technology (DLT) is a promising solution that can significantly improve the functioning of capital markets by increasing efficiency while reducing risks and transaction costs. The fundamental value of DLT is a single, unalterable, transparent ledger shared by all market participants while maintaining confidentiality and professional secrecy,” said Maciej Trybuchowski, President and CEO of KDPW and KDPW_CCP.
With a single distributed system shared by all market participants, DLT-based systems would theoretically eliminate intermediaries in the execution of market processes. However, the exclusion of professional intermediaries from the value chain brings a number of new risks. The presence of institutions such as central securities depositories, banks, and investment firms is essential to ensure the stability of capital markets. These entities play a key role in managing systemic risk, protecting investors, and meeting regulatory requirements, including those arising from KYC (customer identity and risk profile verification) and AML (anti-money laundering and counter-terrorist financing).
The presented project is an important step towards the modernisation and development of the domestic capital market infrastructure, responding both to global trends and to initiatives undertaken by other European markets in the implementation of innovative technologies and new business and operating models.
“The White Paper available on the KDPW website is an invitation to market institutions, including primarily KDPW participants, to join the CSDonDLT project, cooperate and make a joint effort to improve innovation in the Polish capital market. The participation of a wide range of capital market institutions in co-creating a DLT infrastructure integrated into the current ecosystem, and consequently offering clients the possibility of maintaining separate securities account functionality in the blockchain network, may indeed open up new opportunities for the development of services and of the market as such,” said Maciej Trybuchowski.
The transformation of infrastructure and market models should primarily focus on integrating innovative technologies with existing structures in order to maximise the benefits of DLT while protecting the stability and security of the financial system. This approach makes it possible to achieve economies of scale and leverage the strengths and advantages of new and traditional models. This, in turn, contributes significantly to the cutting edge of the Polish capital market in Europe, both with regard to traditional financial instruments and in terms of creating synergies between this market and the dynamically developing financial services on cryptoasset markets.
“We at KDPW see DLT not as a threat to traditional institutions but as an opportunity for their transformation and adaptation to the requirements of the modern digital economy. KDPW’s experience with distributed technologies confirms that it is possible for blockchain-based solutions to coexist harmoniously with legacy market structures. The key to success is the integration, not the elimination, of professional intermediaries and financial institutions, which play and will certainly continue to play a key role in ensuring market stability, efficiency and security, including investor protection,” added Mr Trybuchowski.
In the face of dynamic regulatory and technological changes, Poland has an opportunity to develop its own complementary capital market model which on the one hand takes into account local specificities and on the other hand is open to cross-border applications. We are ready to play a leading role in this process, and we invite market institutions to jointly design a future based on a modern, secure and competitive capital market infrastructure.
The CSDonDLT project and the accompanying White Paper present new current experiences and observations of KDPW regarding the potential and benefits of using blockchain as a supplement and functional extension of the traditional capital market infrastructure.
The White Paper is available on https://www.csdondlt.kdpw.pl/en/index.html
The CSDonDLT project will result in the implementation of an additional complementary layer of the depository and settlement system based on blockchain. At this stage, the solution under development focuses on the settlement of OTC transactions, covering the safe-keeping and unencumbered transfer of securities as well as the atomic settlement of transactions within the DLT layer. Full interoperability of both layers of the depository and settlement system will enable smooth transfers of securities from the traditional layer to DLT and vice versa.
In KDPW’s opinion, blockchain allows to redefine and create new models for the safe-keeping and transfer of assets and to build trust between market participants in a shared and distributed IT system.
“Traditional capital market infrastructure, while effective, efficient and secure, is marked by significant complexity and centralisation of processes. Each transaction requires the cooperation of multiple entities and the reconciliation of data stored in separate IT systems operated by market participants. In this context, distributed ledger technology (DLT) is a promising solution that can significantly improve the functioning of capital markets by increasing efficiency while reducing risks and transaction costs. The fundamental value of DLT is a single, unalterable, transparent ledger shared by all market participants while maintaining confidentiality and professional secrecy,” said Maciej Trybuchowski, President and CEO of KDPW and KDPW_CCP.
With a single distributed system shared by all market participants, DLT-based systems would theoretically eliminate intermediaries in the execution of market processes. However, the exclusion of professional intermediaries from the value chain brings a number of new risks. The presence of institutions such as central securities depositories, banks, and investment firms is essential to ensure the stability of capital markets. These entities play a key role in managing systemic risk, protecting investors, and meeting regulatory requirements, including those arising from KYC (customer identity and risk profile verification) and AML (anti-money laundering and counter-terrorist financing).
The presented project is an important step towards the modernisation and development of the domestic capital market infrastructure, responding both to global trends and to initiatives undertaken by other European markets in the implementation of innovative technologies and new business and operating models.
“The White Paper available on the KDPW website is an invitation to market institutions, including primarily KDPW participants, to join the CSDonDLT project, cooperate and make a joint effort to improve innovation in the Polish capital market. The participation of a wide range of capital market institutions in co-creating a DLT infrastructure integrated into the current ecosystem, and consequently offering clients the possibility of maintaining separate securities account functionality in the blockchain network, may indeed open up new opportunities for the development of services and of the market as such,” said Maciej Trybuchowski.
The transformation of infrastructure and market models should primarily focus on integrating innovative technologies with existing structures in order to maximise the benefits of DLT while protecting the stability and security of the financial system. This approach makes it possible to achieve economies of scale and leverage the strengths and advantages of new and traditional models. This, in turn, contributes significantly to the cutting edge of the Polish capital market in Europe, both with regard to traditional financial instruments and in terms of creating synergies between this market and the dynamically developing financial services on cryptoasset markets.
“We at KDPW see DLT not as a threat to traditional institutions but as an opportunity for their transformation and adaptation to the requirements of the modern digital economy. KDPW’s experience with distributed technologies confirms that it is possible for blockchain-based solutions to coexist harmoniously with legacy market structures. The key to success is the integration, not the elimination, of professional intermediaries and financial institutions, which play and will certainly continue to play a key role in ensuring market stability, efficiency and security, including investor protection,” added Mr Trybuchowski.
In the face of dynamic regulatory and technological changes, Poland has an opportunity to develop its own complementary capital market model which on the one hand takes into account local specificities and on the other hand is open to cross-border applications. We are ready to play a leading role in this process, and we invite market institutions to jointly design a future based on a modern, secure and competitive capital market infrastructure.
