The Depository Trust & Clearing Corporation has completed a large-scale production exercise using tokenized stocks, exchange-traded funds and U.S. Treasury securities, bringing together JPMorgan, Goldman Sachs, BlackRock and a broad group of institutions preparing for the next phase of blockchain-based capital-market infrastructure.

The transactions were processed on July 15 using securities held at The Depository Trust Company, DTCC’s central securities depository subsidiary. DTCC converted the assets into blockchain-based tokens and used them across several institutional workflows designed to resemble activity already conducted in conventional securities markets. The organization said the exercise represented its broadest tokenization production initiative to date in terms of asset classes, use cases and industry participation.

More than 30 banks, asset managers, trading firms, financial-market utilities, technology providers and digital-asset companies participated. The group included BlackRock, Goldman Sachs, J.P. Morgan, BNP Paribas Securities Corporation, Citadel Securities, CME Group, Invesco, Nasdaq, the New York Stock Exchange, State Street Investment Management, Tradeweb, Vanguard and Virtu Financial. Blockchain, custody and wallet providers such as BitGo, Blockdaemon, Chainlink, Circle and Fireblocks were also involved.

JPMorgan opened the exercise by converting a portion of its holdings in the Invesco QQQ Trust into tokenized form, according to reports on the initiative. The demonstration also involved securities such as Microsoft and Circle Internet Group shares, the SPDR S&P 500 ETF Trust, the iShares 0-3 Month Treasury Bond ETF and U.S. Treasury instruments with different maturities.

The breadth of assets was important because DTCC is seeking to demonstrate that tokenization can work across multiple parts of the securities market rather than being limited to a single fund, bond or privately issued instrument. Equities, ETFs and government securities have different trading, settlement, collateral and corporate-action requirements, making their inclusion a wider test of the proposed infrastructure.

The initiative covered collateral pledges, securities lending, Treasury and repo delivery-versus-payment transactions, equity delivery-versus-payment trades, equity delivery-versus-delivery trades, token transfers and central-counterparty margin workflows. Those applications place the project within the core post-trade functions of institutional markets, where firms manage settlement obligations, counterparty exposure, financing and collateral requirements.

DTCC’s model differs from tokenized products that use a separate financial instrument or contractual wrapper to reproduce the economic performance of a stock. Under the DTCC framework, the token represents a security already held at DTC and is designed to retain the same legal ownership, economic entitlements and investor protections as the conventional asset. Tokenized securities can be converted back into traditional form when required.

The traditional and tokenized forms also share the same CUSIP identifier, according to DTCC’s service description. That structure is intended to maintain a common liquidity pool rather than dividing trading activity between an original security and an independently issued blockchain instrument. DTC participants would be able to transfer assets between conventional accounts and approved blockchain wallets while preserving the connection to the underlying securities record.

This approach places regulated market infrastructure at the center of token issuance and recordkeeping. DTC already provides custody and asset servicing for securities valued at approximately $114 trillion, while DTCC subsidiaries processed securities transactions worth $4.7 quadrillion during 2025. Applying tokenization within that existing framework could give financial institutions a route to blockchain functionality without abandoning established custody, compliance and asset-servicing arrangements.

The exercise used two networks. Transactions were conducted on a private Ethereum-compatible blockchain based on Besu technology from LF Decentralized Trust and on the Canton Network, a public blockchain designed for regulated financial markets. DTCC described the use of both systems as part of a multichain strategy intended to provide institutions with operational choice while reducing dependence on a single ledger.

Interoperability is one of the principal challenges facing institutional tokenization. Banks, asset managers, exchanges and fintech companies have developed numerous networks, but assets issued on one ledger cannot always move efficiently to another. Market participants also need consistent rules for identity, wallet registration, transaction finality, privacy, sanctions screening, asset recovery and regulatory reporting.

DTCC’s proposed service aims to provide a common layer connecting approved networks and participant wallets. The organization has said tokenized assets will be transferable among registered participants within preapproved blockchain environments. Its architecture also includes controls allowing authorized operators to mint, burn, pause, freeze, unfreeze, force-transfer or claw back tokens when needed to meet legal, compliance or operational requirements.

Those capabilities illustrate the difference between institutional tokenization and permissionless crypto trading. Regulated securities infrastructure must be able to respond to court orders, sanctions, erroneous transfers, cybersecurity incidents, lost credentials and other circumstances in which an irreversible transaction would be unacceptable. DTCC is seeking to preserve those protections while enabling programmable movement and settlement of assets.

DTCC also plans to use its ComposerX LedgerScan technology to monitor ownership across traditional databases and blockchain ledgers. Near-real-time reconciliation could become increasingly important if the same security is capable of moving between multiple forms and networks. A consolidated ownership view would help market participants prevent duplicate records, maintain accurate positions and manage corporate actions such as dividends, redemptions and voting rights.

The organization initially expects its smart contracts to focus on compliance, distribution controls and links to reference data stored on-chain. Broader automation could later extend to issuance, settlement and corporate actions. That progression would make tokenization more than a change in the format of the security: it could allow operational rules and transaction conditions to be incorporated directly into the asset’s digital infrastructure.

Collateral management is among the most commercially significant potential applications. Banks and trading firms frequently hold high-quality securities in accounts, legal entities or jurisdictions where the assets cannot be moved quickly enough to satisfy an immediate margin requirement. A tokenized security that can be transferred at any time between approved wallets could make collateral more mobile and reduce the amount of additional liquidity firms maintain as a buffer.

Faster collateral movement may also improve capital efficiency in repo, derivatives clearing and securities-financing markets. Institutions could potentially use the same pool of eligible securities across multiple transactions with fewer manual handoffs. The benefits, however, will depend on whether the tokenized asset and the corresponding payment can move together with reliable legal finality. A faster securities leg provides limited value if the cash leg remains restricted by banking hours or incompatible systems.

DTCC has therefore been examining tokenized deposits, regulated stablecoins and other digital-cash models alongside tokenized securities. Delivery-versus-payment requires the transfer of an asset and payment to occur as linked obligations, reducing the risk that one side performs while the other does not. Industry efforts will need to align tokenized cash, settlement banks, blockchain networks and existing payment infrastructure before round-the-clock securities settlement can operate at significant scale.

The regulatory foundation for DTCC’s service was established in December 2025, when DTC received a no-action letter from the Securities and Exchange Commission. The authorization allows DTC to offer a controlled tokenization service to its participants and their clients for three years, subject to stated limitations and representations.

The eligible assets include constituents of the Russell 1000 Index, ETFs tracking major indexes and U.S. Treasury bills, notes and bonds. The initial scope concentrates on highly liquid instruments with established market structures, pricing and custody arrangements. Less liquid securities, private-market assets and instruments with more complicated transfer restrictions are not the immediate focus of the authorized service.

DTCC subsequently formed an industry working group to shape technical standards, operating procedures and onboarding requirements. The group has expanded from more than 50 firms in May to more than 100 members and partners, according to the organization. Its participants span custodians, broker-dealers, asset managers, trading venues, clearing firms, fintech platforms, wallet providers and blockchain developers.

The July exercise was intended to validate that the technology could operate in a production environment while maintaining the resiliency and control expected from existing market infrastructure. It was not a broad public launch, and participation remained limited to institutions and technology providers involved in the initiative. The next major milestone is the planned October 2026 launch of DTCC’s Tokenization Service.

The commercial rollout will test whether firms see sufficient economic value to integrate the platform into daily operations. Connecting internal systems, registering wallets, establishing governance policies and adapting compliance procedures could require significant investment. Banks and asset managers will also need to determine when tokenized settlement produces measurable savings compared with conventional infrastructure that has already become faster following the U.S. market’s move to a one-day settlement cycle.

The strongest early business cases may emerge where blockchain infrastructure offers capabilities that conventional systems do not provide consistently, including continuous asset mobility, direct wallet-to-wallet transfers and programmable collateral controls. Tokenization may be less compelling when it simply reproduces an existing transaction on a different technology platform without reducing reconciliation, funding or operational costs.

Competition is also increasing. Crypto-native companies including Securitize and Ondo Finance have developed tokenized funds and securities infrastructure, while major banks and asset managers are building proprietary blockchain networks, tokenized deposit products and digital-asset platforms. BlackRock has already worked with tokenization providers on blockchain-based investment products, and Goldman Sachs and JPMorgan have invested in their own institutional digital-asset capabilities.

DTCC’s advantage is its position within the existing market structure. Because securities are already deposited at DTC, its tokenization service can create digital representations without requiring issuers and intermediaries to reconstruct the entire custody chain. The same feature could also help maintain legal clarity and prevent liquidity from fragmenting across multiple unrelated token formats.

The July transactions indicate that the industry’s tokenization debate is shifting from proof-of-concept demonstrations toward operational design. Questions remain about interoperability, cybersecurity, transaction governance, digital cash, operating hours and the allocation of responsibility when assets cross networks. Even so, the involvement of leading banks, asset managers and exchanges suggests that the technology is now being evaluated as potential production infrastructure rather than as an experimental extension of cryptocurrency markets.

DTCC’s October launch will provide a more meaningful measure of adoption. The critical indicators will include the number of institutions that onboard, the value and variety of securities converted, the frequency with which tokens are used in financing and collateral transactions, and whether activity expands beyond scheduled demonstrations. If those metrics develop, tokenized securities could become an additional operating format within regulated markets rather than a separate asset class.