With the expected growth of distributed ledger technology (DLT) implementation, the post-trade financial services company, Depository Trust & Clearing Corporation (DTCC), published a white paper on security issues and guidelines for securing DLT networks. The paper recommends establishing comprehensive DLT Security Framework to review existing security protocols, gaps in the procedures and increase the security standards. DTCC also suggest formation of an Industry Consortium to promote the topic.
The paper suggests a DLT Security Framework would:
- Assist with risk evaluation via best practices and other tools like cybersecurity controls, third-party management, and incident & event management.
- Address specific security considerations of the DLT process such as creation, maintenance, storage and disposal of sensitive information.
- Provide security guidelines for account access through cryptographic hash functions, standard authentication methods and draw experience and know-how from traditional IT environments.
Stephen Scharf, Chief Security Officer at DTCC, commented:
Stephen Scharf
With adoption of DLT across the financial services ecosystem likely to continue to increase in the coming years, we need to be certain that all DLT-related security risks are identified and addressed to maintain the safety and stability of the markets. DLT offers great potential, but as with any new technology, it also comes with certain risks. Traditional security measures may not be adequate, so it is critically important that this topic is top of mind for any DLT implementation.
DTCC advocates for coordinated strategy to address and cope with DLT- specific security risks. The company will use its position in the financial service sector to promote it across the industry.
Scharf added:
As is common in IT security communities, frameworks must be widely available, generally agreed upon, and commonly adopted. As best practices mature, they can be adopted into a formal framework and used for financial industry participants and regulators alike.
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