DTCC to Digitize U.S. Treasuries with Canton Network’s Blockchain

TLDR

• DTCC partners with Canton Network to tokenize U.S. Treasury securities.

• Tokenization of U.S. Treasuries aims to increase liquidity in financial markets.

• DTCC’s initiative is expected to launch in 2026, expanding to other assets.

• SEC approved DTCC’s pilot for tokenizing assets worth $100 trillion.

The Depository Trust & Clearing Corporation (DTCC) has formed a strategic partnership with Digital Asset and Canton Network to begin the tokenization of U.S. Treasury securities. This marks DTCC’s first move to bring DTC-custodied assets onto the blockchain. The effort is aimed at modernizing market infrastructure by leveraging Canton Network’s blockchain technology, which is designed to ensure privacy, compliance, and institutional control.

This collaboration comes shortly after the U.S. Securities and Exchange Commission (SEC) issued a No-Action Letter to DTCC, providing the company with regulatory clarity to tokenize real-world assets held in custody by the DTC. The SEC approval enables DTCC to move forward with the pilot tokenization project, with a launch scheduled for 2026.

Canton Network’s Blockchain and Privacy Features

Canton Network was selected due to its privacy-focused blockchain, which is essential for institutional clients. Most public blockchains display transaction data to anyone, but Canton Network offers privacy by ensuring that users only see the parts of transactions that apply to them.

This privacy feature is crucial for financial institutions, which need to comply with stringent regulations while keeping sensitive information secure.

Canton Network’s blockchain also allows DTCC to tokenize securities while maintaining the legal rights and protections of traditional forms. This ensures that tokenized assets, including U.S. Treasuries, will retain the same legal status as their non-tokenized counterparts, enabling a smooth transition for institutional investors into the world of digital assets.

Tokenizing High-Value Assets with the Vision for Expansion

While the initial focus is on tokenizing U.S. Treasury securities, DTCC’s ultimate aspiration is to expand this initiative to include a broad range of high-value, highly liquid assets. The first phase will involve tokenizing U.S. Treasuries, the Russell 1000 index, and major ETFs.

As part of its broader strategy, DTCC aims to tokenize the entire depository, which could include trillions of dollars’ worth of assets.

Frank La Salla, CEO of DTCC, emphasized that this collaboration sets the stage for creating a shared infrastructure that supports the tokenization of a wide variety of DTC-eligible assets across multiple network providers. This initiative could revolutionize how financial markets operate, bringing enhanced liquidity and efficiency to capital markets.

SEC’s No-Action Letter and Future Plans

Last week, the SEC issued a No-Action Letter to DTCC, granting it the regulatory cover needed to tokenize real-world assets held in custody by DTC. This letter provides the legal framework that allows DTCC to issue tokenized versions of highly liquid assets, such as U.S. Treasuries, Russell 1000, and major ETFs. This marks a critical step forward in blockchain adoption within the traditional financial system.

According to DTCC, the SEC’s approval sets the groundwork for future developments in asset tokenization. The company’s pilot project will begin in 2026 with tokenized U.S. Treasury securities, but the broader goal is to tokenize the entire depository. DTCC is aiming to eventually include a wide range of other highly liquid financial instruments, enabling greater efficiency and liquidity in the financial system.

As part of the collaboration, DTCC will also take a leadership role in the governance of the Canton Network. The company will co-chair the Canton Foundation alongside Euroclear, a Belgium-based infrastructure provider servicing international markets. Canton’s ecosystem currently supports over $6 trillion in assets, with more than 600 institutions participating, further highlighting the scale and importance of this network in the financial ecosystem.

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