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| By Mark Gough |
One of the more consequential developments in tokenization this year didn’t come from a new blockchain launch or a crypto-native firm.
It came from the center of the U.S. financial system.
Earlier this month, the Depository Trust & Clearing Corporation (DTCC) confirmed that its subsidiary, The Depository Trust Company (DTC), received a No-Action Letter from the U.S. Securities and Exchange Commission.
The approval allows DTC to begin offering a tokenization service for assets already held in custody.
In practical terms, this places U.S. stocks, exchange-traded funds and Treasury securities on a defined regulatory path toward tokenization.
These are not new assets or alternative instruments.
They are the same securities already traded and settled today. Now, though, they could see blockchain technology introduced as an additional representation layer.
What DTCC Has Been Approved to Do
Critically, under the SEC’s guidance, DTC can only tokenize certain securities that are already custodied within its existing systems.
The structure is intentionally conservative:
- The underlying assets remain fully regulated and held at DTC
- A digital token can be issued to represent those assets
- The service operates within a controlled production environment
This authorization runs for a three-year period. During that time, DTCC will develop, test and gradually expand the service, with a broader rollout expected to begin in the second half of 2026.
The initial focus is on highly liquid and widely used instruments. This includes U.S. equities, ETFs as well as Treasury bills, notes and bonds.
These assets form the backbone of global capital markets and collateral systems, making them suitable starting points for tokenized representations.
From Approval to Implementation
DTCC followed the regulatory approval with an important signal: This is not theoretical.
The infrastructure build has already begun.
On Dec. 17, DTCC announced a partnership with Digital Asset Holdings to begin tokenizing DTC-custodied U.S. Treasury securities.
This marked the transition from regulatory clearance to actual implementation.
The pilot will run on the Canton Network, a blockchain designed for institutional use cases. Unlike public, permissionless networks, Canton supports privacy controls, permissions and compliance features that regulated financial institutions require.
DTCC and Digital Asset are targeting a minimum viable product in the first half of 2026, with the Treasury pilot serving as a foundation for potential expansion into other asset classes.
The choice of Treasurys is deliberate. U.S. government debt sits at the center of global funding markets, repo activity and collateral management.
Tokenizing Treasurys allows DTCC to test settlement efficiency and collateral mobility … without introducing complexity from less liquid or more idiosyncratic assets.
Why This Matters for Market Infrastructure
DTCC processes the majority of U.S. securities transactions and safeguards tens of trillions of dollars in assets globally. Short-term trends rarely drive changes at this level. They tend to reflect longer-term shifts in how markets are expected to operate.
Tokenized representations offer several potential improvements to existing systems:
- Shorter settlement cycles
- Reduced operational friction and reconciliation costs
- Improved collateral efficiency across time zones and markets
Importantly, these benefits can be pursued without altering the legal framework that underpins market trust.
Assets remain custodied, regulated and governed by existing rules. All while blockchain infrastructure streamlines how information and value move through the system.
DTCC has been clear that this effort is about improving the plumbing of markets rather than replacing them.
Why This Matters for Crypto Markets
For crypto specifically, this move has the potential to shake things up in three big ways.
First, DTCC’s approach sets up the blockchain as an infrastructure tool for settlement, record-keeping and collateral management.
That’s a big improvement over a mere speculative asset layer.
Second is the establishment of higher standards for real-world asset tokenization. This may result in fewer, more regulated platforms over multiple experimental models.
Finally, it generates bullish tailwinds for institutional-grade crypto infrastructure.
For many institutional participants, the regulatory clarity brought by this move matters more than the technology itself.
Asset managers, custodians and banks have generally been reluctant to commit to tokenized systems without explicit regulatory alignment.
This development removes a significant point of hesitation.
Networks and tooling designed for privacy, reliability and regulatory alignment are better positioned to benefit as tokenized markets develop.
What Comes Next
Several developments will shape how meaningful this initiative becomes over time:
- Expansion beyond Treasurys into equities and ETFs
- Approval of additional blockchain environments
- Adoption by major custodians, banks and asset managers
- Use of tokenized Treasurys in collateral and funding markets
Each step will indicate how quickly tokenization moves from pilot programs into everyday market operations.
But don’t expect change overnight. Progress is likely to be measured, rather than rapid.
This is typical for how market infrastructure evolves, particularly when regulatory and systemic risk considerations are involved.
Bottom Line
For years, tokenization has been treated as a theoretical upgrade.
Now, the DTCC’s actions turn it into an operational one.
When the backbone of U.S. capital markets starts issuing tokenized representations of existing securities, it signals a practical shift in how market infrastructure is evolving.
This change will unfold quietly. But its impact could be lasting, able to influence how assets move, settle and function across the global financial market.
Best
Mark Gough
P.S. The tokenization trend is still in its early days. Which means we don’t yet know which networks will capture the lion’s share of institutional activity that will come from it.
That’s where my colleague Michael Robinson comes in. He’s looking at this news from the TradFi side. And he’s found a few ways to gain exposure to tokenization from that angle.
In fact, he recently published several reports on the TradFi companies at the heart of this $19 trillion crypto boom. You can learn more about them — and how to access his full reports on them — here.
