DTCC turns on asset tokenization: how the switch works

The Depository Trust Company, the central securities depository owned by DTCC, opened its tokenization service to clients on Wednesday, Unchained reported. Eligible securities held at DTC can now be turned into tokens and turned back again. This article looks at what that switch actually changes inside the plumbing of US markets, and what it leaves alone.

What happened

DTCC announced the DTCC Tokenization Service in a release at 8:04 a.m. ET, according to Unchained. So far 20 participants are signed up, including Citadel Securities, Morgan Stanley, Citi, J.P. Morgan and Fidelity Investments. DTCC said others can join over time, and its tokenization page lists 34 securities that can be tokenized at launch.

The service grew out of a narrower plan. In December 2025, DTCC aimed to tokenize part of the U.S. Treasuries held at DTC on the Canton Network, as a minimum viable product in the first half of 2026. In May it set a timetable of a July pilot and an October launch, and more than 30 firms made limited production trades on July 15. In the release, DTCC chief executive Frank La Salla put it this way: "Today marks the culmination of years of work to bring tokenized securities into a regulated framework supported by trusted market infrastructure".

Asset tokenization explained: the depository's role

Asset tokenization means representing an existing asset, such as a share or a bond, as a token on a blockchain. The hard part is not creating the token. It is making sure the token and the legal claim stay tied together. DTCC's version starts from where most US securities already live.

Today, most shares and bonds in the US are not held as paper or in the investor's own name. They sit at DTC in book-entry form, which simply means ownership is a line in a ledger. Banks and brokers, called participants, hold accounts at DTC. Their customers' holdings are recorded on the brokers' own books underneath. When a trade settles, DTC moves the security from one participant's account to another's. The new service adds a second form that the same security can take.

• Start: a participant holds an eligible security at DTC in book-entry form.
• Mint: the participant asks DTC to turn that position into a token.
• Deliver: the token goes to a wallet the participant chooses, on the Canton Network or DTCC's private Besu network.
• Reverse: the token can be converted back into an ordinary book-entry position.

This two-way door is the key design choice. A token that can always be turned back into the ordinary position cannot drift far from it, because a participant who sees a gap can convert. DTCC stated that each token keeps the same legal and economic rights as the security behind it. That is different from wrapper products, where a separate issuer holds the asset and the token is only a claim on that issuer.

Which assets qualify, and why

What can be tokenized is set by a no-action letter that DTC received from SEC staff in December 2025. A no-action letter is a statement that staff would not recommend enforcement if a firm acts as described. It is not a new rule, and it covers only what the request laid out. Here that means three groups: stocks in the Russell 1000 index, U.S. Treasury securities, and ETFs following major indexes.

Scale explains why this matters. Per the release, assets held in custody at DTC exceed $114 trillion. The design drew comments from more than 150 firms in a DTC working group. DTCC also credited 17 outside firms, with Ondo, Broadridge, BitGo and Fireblocks among them.

What changes, and for whom

For now, the change is aimed at institutions, not individual investors. The release speaks of DTC clients, who choose the wallet that receives a token. The service is run by DTC itself, a depository, which fits the "regulated framework" in La Salla's statement.

For the wider market, the change is in where the record can live. A tokenized position sits on a blockchain while it is in token form, so the systems that read it, such as custody and compliance tools, have to work there too. Supervisors are watching too: SEC examiners have said tokenization at clearing agencies will be among the areas they review in fiscal 2027.

What the reports leave open

Unchained noted that the release counts only signed participants. It gives no figure for firms that have actually traded, and no trading volume. Signing up and using the service are different things. Nor is there a map of which clients or assets use Canton and which use Besu, and DTCC plans to add more blockchains in 2027. Different chains can mean different arrangements for who runs the network, so the mapping matters.

Nadine Chakar, who leads digital assets globally at DTCC, described the launch as only a first step in linking existing market infrastructure to distributed ledgers. The useful things to watch are usage numbers, which chains carry which assets, and whether the eligible list widens beyond the no-action letter.

Sources

• Unchained, 29 Oct 2026

How this post was made: an AI model drafted it from the sources listed above, and software checks ran before it went live without a human edit. Every figure has to match a listed source and no sentence is copied. It explains how the mechanism works; it is not investment advice.