The Depository Trust Company has activated a new tokenization service that allows eligible participants to convert securities held at DTC into blockchain-based tokens and redeem those tokens back into conventional positions. The service starts on two networks, the Canton Network and DTCC’s private Besu chain.

At launch, 20 DTC participants have signed up and 34 securities are available for conversion. Those initial assets come from the group the US Securities and Exchange Commission covered in a no-action letter issued last December, including Russell 1000 stocks, index-tracking exchange-traded funds and US Treasuries.

How the service works

Under the model introduced by DTC, each token is backed one-for-one by a security held at the depository. DTC continues to maintain the official ownership records, while the tokenized version can be used on supported blockchain networks.

DTCC said tokens can move between registered wallets at any time, and it is targeting conversion times of 15 minutes or less when participants switch between conventional and tokenized form. The setup is designed to add on-chain functionality without moving the underlying securities out of DTC’s existing custody framework.

Participants and launch roster

The 20 firms that have signed agreements include major market participants such as Bank of America, Barclays, Citi, Fidelity Investments, JPMorgan, Morgan Stanley, Citadel Securities, State Street and UBS. Mirae Asset Securities (USA) is also listed among participants.

DTCC also named Ondo Finance, Broadridge, DRW and Fireblocks as ecosystem collaborators. It noted that some large institutions, including BNY and Goldman Sachs, are not part of the initial participant group, although additional firms are expected to be added over time.

Operating limits and supported networks

The service currently supports the Canton Network and DTCC’s private Besu chain. When a tokenized position is moved from one chain to another, the transfer must pass through DTC’s conversion service rather than occurring directly between networks.

That conversion service runs from 2 a.m. to 6 p.m. Eastern Time on business days. As a result, continuous 24/7 transfers are only available when activity stays within the same blockchain network, while cross-chain movement and conversions between tokenized and traditional positions remain tied to those operating hours.

Timeline and what comes next

The launch matches the timetable DTCC outlined in May, when it said limited production would begin in July ahead of a full rollout in October. The current release follows the SEC no-action letter from December that defined the initial set of eligible securities.

More than 150 firms contributed to the design through an industry working group, according to DTCC. The company plans to add Stellar and Arc as additional networks in 2027, while broader adoption will depend on how many signed participants begin live conversions and whether more custodians join the service.

Source: www.blockhead.co