The Depository Trust & Clearing Corporation (DTCC) has secured regulatory clearance to pilot a tokenization service and will use the privacy-focused Canton Network as its blockchain partner. The decision, enabled by a U.S. Securities and Exchange Commission no-action letter dated December 11, 2025, targets custodied U.S. Treasury securities and sets a defined timetable toward production readiness in 2026. The move positions DTCC to test on-chain custody and settlement for core market instruments inside a tightly bounded regulatory framework.
Regulatory perimeter and pilot structure
The SEC’s December 11, 2025 no-action letter permits DTCC to operate a controlled, three-year pilot for tokenizing assets custodied at the DTC, under specified Exchange Act conditions. A no-action letter is a staff assurance that enforcement will not be recommended for the described activity if conditions are met, creating a confined compliance envelope for institutional experimentation while preserving investor-protection expectations and supervisory oversight. The approval explicitly anchors obligations for reporting, custody integrity and ongoing regulatory dialogue as DTCC progresses from pilot to potential live service.
DTCC’s tokenization strategy is built around its ComposerX platform suite, rebranded following the Securrency acquisition and described as blockchain-agnostic middleware that orchestrates token creation, lifecycle management and settlement flows. ComposerX, together with a reconciliation component called LedgerScan, is intended to bridge legacy systems and on-chain records so auditability and process integrity are maintained as assets move between traditional ledgers and tokenized form. The Canton Network, developed by Digital Asset, is selected for its institutional design that enforces configurable privacy controls while permitting synchronized settlement across disparate systems, keeping sensitive transaction data confidential without obstructing legally required disclosures.
Architecture and governance choices are designed to mirror market-infrastructure expectations. A designated third-party validator role, provided by a partner such as Chainlink, is meant to reinforce consensus security and ecosystem trust while DTCC emphasizes segregated custody, auditability and controlled access. These features align with the need to protect client assets, preserve evidentiary records and support external oversight in a regulated clearing and settlement environment.
The initial pilot scope focuses on a subset of U.S. Treasury securities held at DTC, with later phases planned to add Russell 1000 equities and major index ETFs as operational lessons are incorporated. DTCC anticipates delivering a minimum viable product in the first half of 2026, moving to a production-ready service in the second half of 2026, and formally launching the three-year pilot in late 2026 as client uptake and operational readiness converge. This phased roadmap allows controlled scaling of asset coverage and participant numbers.
Expected benefits for market structure include potential same-day or near-instant settlement (T+0), reduced bilateral counterparty exposures, enhanced collateral mobility and the technical capacity for extended trading hours or continuous markets. Custodians, brokers and issuers will need to adapt reconciliation processes, custody models and reporting pipelines so that reserve transparency and mandatory disclosures remain intact as positions are mirrored or moved on-chain. The tokenization layer does not remove existing obligations but changes where and how they are operationalized.
Operational and regulatory risks remain material. Uncertainty around legal enforceability of tokenized ownership, cross-network interoperability and comprehensive audit trails will require constant coordination with supervisors to ensure conformity with existing securities laws and post-trade obligations. Interoperability challenges, in particular, demand robust mapping between legacy post-trade systems and on-chain state to avoid breaks in settlement, record-keeping or risk management.
DTCC’s approach combines ComposerX orchestration, LedgerScan reconciliation and active governance participation on the Canton Network to mitigate these risks. By embedding standards for process automation, identity controls and external auditability into both the middleware and the underlying network, the DTCC–Canton initiative establishes a structured, regulatorily scoped path to tokenize DTC-custodied Treasuries and, over time, a broader universe of securities. The project’s success will hinge on proving secure interoperability and compliant market operations at scale.
