The Depository Trust & Clearing Corporation (DTCC) has selected the privacy-focused Canton Network to pilot tokenization of DTC-custodied U.S. Treasury securities, following regulatory clearance. A no-action letter issued by the U.S. Securities and Exchange Commission on December 11, 2025 authorizes a three-year pilot for a DTCC subsidiary, establishing the legal foundation for an on-chain tokenization program.
How DTCC’s Canton Pilot Brings Treasuries On-Chain
The initiative combines DTCC’s ComposerX platform suite, the Canton Network as the ledger, Digital Asset as platform architect and Chainlink as Super Validator to secure market data and cross-chain messages. ComposerX will interface with custodians and legacy systems to manage the lifecycle of tokenized assets, and a “digital twin” — a blockchain-based electronic record that represents a specific underlying asset — will be minted only after custodial verification and immobilization of the original book-entry securities to keep on-ledger and off-ledger records reconciled.
The tokenization workflow is described in four operational steps: asset creation, collateral delivery, collateral return and closeout, each mapped to specific custodian and smart-contract actions. In asset creation, the custodian verifies positions in DTCC records and instructs ComposerX to mint the digital twin on Canton while the underlying securities are locked in place; collateral delivery for margin or settlement then uses atomic transfers on Canton, with Chainlink Data Streams supplying real-time valuations needed for margin calculations.
During normal operations, collateral returns and unencumbrances are executed atomically to restore the original status of the assets in both DTCC records and the on-chain registry. In a default closeout scenario, pre-defined smart contract logic combined with Chainlink market feeds enables secured parties to seize tokenized collateral with traceability on the ledger, ensuring that enforcement and unwind mechanics remain auditable end-to-end.
Chainlink’s Cross-Chain Interoperability Protocol (CCIP) is integrated so that compliant communication across different blockchain domains can support pricing, messaging and collateral workflows without breaking regulatory boundaries. Data Streams provide definitive price and valuation inputs for margining and liquidation, reinforcing the reliability of on-chain processes that depend on accurate, time-sensitive market data.
The SEC no-action letter granted to the DTCC subsidiary sets the regulatory parameters that allow the pilot and its workflows to operate under defined conditions while preserving investor-protection expectations. Canton’s permissioned architecture offers configurable privacy controls that limit data visibility in transactions, a design choice meant to satisfy confidentiality and compliance requirements for institutional counterparties while retaining auditability for supervisory and legal traceability.
DTCC will assume a leadership role in network governance, sharing foundation stewardship with other institutional actors to shape standards and operational rules for the Canton Network. The governance blueprint and the reconciliation mechanism between on-ledger records and traditional custody are intended to secure legal certainty, with immobilization of underlying securities and a reconciled registry treated as core elements of continuity between existing and tokenized infrastructures.
Strategically, the project targets increased settlement efficiency, improved collateral mobility and 24/7 tradability of tokenized instruments, with expansion beyond Treasuries to equity indices and ETFs. Atomic settlement and near-real-time visibility aim to reduce settlement friction and optimize capital usage, while for operational resilience and compliance teams the combined architecture heightens scrutiny on custody segregation, proof of immobilization, external auditability of oracle inputs and governance arrangements that allocate operational risk and legal responsibility.