The Depository Trust & Clearing Corporation (DTCC) has chosen the Canton Network to pilot tokenization of U.S. Treasury securities, gaining a limited regulatory runway via an SEC no-action letter. The move targets faster settlement, expanded liquidity and 24/7 on-chain workflows that could reshape how institutional treasuries and trading desks manage collateral.
Scope, architecture and regulatory perimeter
The pilot begins with a constrained scope in which a subset of DTC-custodied U.S. Treasuries will be tokenized as the initial live use case, with a minimum viable product slated for H1 2026 and a broader pilot phase expected in late 2026 under a defined three-year period. DTCC plans subsequent pilots that expand to selected Russell 1000 equities and certain ETFs under the same multi-year timeline, using the initial Treasuries rollout as the proving ground for operational readiness and client adoption.
Tokenization in this context means that digitally native representations of existing securities are created and settled on a distributed ledger while preserving legal and custody relationships, allowing assets to move on-chain without disrupting the underlying DTC book-entry system. The SEC’s no-action letter provides a temporary, conditional compliance framework for the pilot rather than permanent approval, underscoring that broader rollout will require alignment with other regulatory regimes beyond the current U.S. perimeter.
The Canton Network is a layer-1 blockchain engineered for institutional finance that prioritizes privacy and interoperability while supporting atomic transactions across multiple sovereign ledgers, enabling simultaneous settlement on different chains without intermediate counterparty exposure. Its design aims to compress settlement from current T+1 cycles toward minutes or seconds and to enable continuous, around-the-clock trading and collateral movements, including use cases such as on-chain repurchase agreements backed by tokenized Treasuries and USDC.
To address institutional risk tolerances, the implementation includes a root wallet held by the Depository Trust Company (DTC) with the ability to reverse erroneous transactions, creating a centralized fail-safe for custody integrity even as it departs from fully decentralized design principles. Chainlink will operate as a “super validator” on the network, integrating oracle feeds and cross-chain interoperability services (CCIP) to support reliable off-chain data and cross-domain messaging for smart-contract execution.
DTCC’s choice is consequential given its scale, as the organization processes securities flows measured in the quadrillions of dollars annually, elevating the operational stakes of any migration to ledger-based settlement. For trading desks and corporate treasuries, the pilot promises improved collateral mobility and potential liquidity gains via 24/7 settlement windows and real-time financing primitives, including lower settlement frictions and faster rehypothecation of tokenized assets as core benefits under evaluation.
Key risks remain in the form of regulatory ambiguity outside the SEC’s temporary relief, particularly across EU, UK and Asian jurisdictions that could limit cross-border utility, as well as governance questions created by centralized reversal capabilities for custodians and asset managers. Systemic reliance on oracle services and new smart-contract infrastructure introduces concentration and technical risks that will require active mitigation, even as DTCC’s participation in tokenization standards work such as ERC-3643 signals an intent to align around interoperable asset types.
The Canton pilot functions as a strategic test of on-chain settlement at institutional scale, with the MVP launch in H1 2026 as the next verified milestone, and its outcome will inform how quickly tokenized real-world assets progress from targeted experiments to core market plumbing.
