• SEC No-Action Letter: Grants DTCC three years to operate the service on pre-approved blockchains without enforcement action.

• Tokenization Focus: Initial rollout targets US Treasury bills, bonds, notes, and major index-tracking ETFs on the permissioned Canton Network.

• Market Impact: DTCC processed $3.7 quadrillion in transactions last year, signaling potential for tokenized assets to transform securities settlement with data from DTCC reports.

Discover how DTCC’s tokenization of US Treasurys on Canton Network is revolutionizing finance. SEC approval paves the way for secure, onchain assets—explore the future of tokenized securities today.

What is DTCC’s Tokenization Service for US Treasurys?

DTCC’s tokenization service involves minting a subset of US Treasury securities custodied at its subsidiary, the Depository Trust Company, directly onto the Canton Network, a permissioned blockchain developed by Digital Asset. This service, greenlit by the SEC through a no-action letter last week, allows for the creation of digital representations of these assets in a regulated environment. By starting with highly liquid US Treasurys and planning expansions to other DTC-eligible assets, the initiative aims to enhance efficiency in clearing, settlement, and trading processes for the US securities market.

The Depository Trust and Clearing Corporation, a cornerstone of US financial infrastructure, announced on Wednesday that it will enable this tokenization to bring real-world assets onchain securely. DTCC CEO Frank LaSalla emphasized that this collaboration with Digital Asset and the Canton Foundation creates a roadmap for high-value use cases, beginning with US Treasurys and eventually covering a broad spectrum of assets across various network providers. In 2024, DTCC subsidiaries handled $3.7 quadrillion in securities transactions, underscoring the scale of this shift toward blockchain integration.

Frank LaSalla speaking with CNBC’s “Crypto World” on Friday after receiving the SEC’s no-action letter. Source: YouTube

The SEC’s rare no-action letter, issued on Thursday, provides DTCC with a three-year window to launch the service on pre-approved blockchains, confirming no enforcement action as long as operations align with the described framework. This approval highlights the regulatory body’s growing support for innovative technologies in capital markets, focusing on compliance and investor protection.

How Does the Canton Network Support DTCC Tokenization?

The Canton Network, a permissioned blockchain created by the fintech firm Digital Asset, serves as the foundational technology for DTCC’s tokenization efforts, offering privacy, interoperability, and scalability tailored for institutional finance. Unlike public blockchains, Canton’s design allows multiple participants to interact without exposing sensitive data, making it ideal for tokenizing sensitive assets like US Treasurys. DTCC plans to mint tokenized versions of Treasury bills, bonds, and notes, as well as exchange-traded funds tracking major indexes such as the Russell 1000, which includes the 1,000 largest public US companies.

This setup ensures that tokenized assets remain under regulated custody while leveraging blockchain for faster settlement and reduced counterparty risk. According to DTCC statements, the network’s governance structure will include the company as co-chair of the Canton Foundation alongside Euroclear, enhancing oversight and standardization. Expert analysis from financial reports indicates that such permissioned networks could process trillions in tokenized value by 2030, with US Treasurys leading due to their liquidity and low risk profile. Frank LaSalla noted in a CNBC interview that this move positions DTCC at the forefront of onchain capital markets, fostering innovation without compromising security.

The minimum viable product is slated for launch in a controlled environment by the first half of 2026, with subsequent expansions based on client demand. Over multiple years, the partnership aims to digitize a wider range of financial instruments, providing access in a secure, regulated setting. Data from industry trackers like CoinShares predicts significant growth in tokenized Treasurys by 2026, driven by institutional adoption and regulatory clarity.

Frequently Asked Questions

What Assets Will DTCC Tokenize First Under the SEC Approval?

The DTCC tokenization service will initially focus on highly liquid US Treasury securities, including bills, bonds, and notes, custodied at the Depository Trust Company. This selection targets assets with established market depth to test the infrastructure. The SEC’s no-action letter specifies these and major index ETFs, ensuring compliance while paving the way for broader adoption in tokenized finance.

Why Is the Canton Network Chosen for DTCC’s US Treasury Tokenization?

The Canton Network is selected for its permissioned structure, which prioritizes privacy and regulatory compliance essential for institutional players like DTCC. It enables secure minting and interoperability across networks without the volatility of public chains. As explained by SEC Chair Paul Atkins, this choice supports an onchain future for US markets by balancing innovation with robust safeguards for tokenized assets.

Key Takeaways

• Regulatory Milestone: The SEC’s no-action letter grants DTCC three years to develop and operate the tokenization service, signaling strong support for blockchain in traditional finance.
• Initial Scope and Expansion: Starting with US Treasurys and ETFs, the project will scale to a broader range of assets, potentially transforming $3.7 quadrillion in annual transactions.
• Future Integration: Experts foresee tokenized real-world assets eventually composing with DeFi, but infrastructure and regulations must evolve to enable lending, borrowing, and trading onchain.

Conclusion

The SEC’s approval of DTCC’s tokenization service for US Treasurys on the Canton Network represents a pivotal advancement in bridging traditional securities markets with blockchain technology. By enabling secure, onchain representations of high-value assets, this initiative enhances efficiency, reduces settlement times, and opens doors to innovative financial products. As markets continue to evolve, stakeholders should monitor developments closely, preparing for a tokenized future that could redefine global capital flows and investment strategies.

SEC Chair Paul Atkins highlighted the significance, stating that US financial markets are poised to move onchain, with the agency prioritizing technologies to facilitate this transition. Meanwhile, NYDIG’s global head of research, Greg Cipolaro, cautioned that while tokenization won’t immediately disrupt crypto markets, deeper blockchain integration could unlock substantial opportunities. He explained that current structures on private networks like Canton limit composability, but advancements in technology and rules could allow tokenized assets to serve as collateral, lending instruments, or trading pairs in decentralized finance. This gradual evolution, as noted in various financial analyses, underscores the need for patient, regulated progress.

DTCC’s role in this landscape is amplified by its infrastructure dominance, processing immense transaction volumes annually. The project’s roadmap, unfolding over years, emphasizes client-driven growth and adherence to best practices. Industry observers, drawing from sources like CoinShares reports, anticipate tokenized Treasurys to spearhead broader real-world asset adoption, potentially injecting liquidity into crypto ecosystems. For investors and institutions, this development offers a glimpse into a more interconnected financial world, where blockchain enhances rather than replaces established systems.