The Depository Trust & Clearing Corporation (DTCC) has selected the privacy-focused Canton Network to tokenize a defined set of U.S. Treasuries, Russell 1000 equities and major index ETFs, under a three-year pilot enabled by a U.S. Securities and Exchange Commission No-Action Letter with Minimum Viable Products targeted for early 2026. The move positions privacy and regulatory compatibility as central requirements for institutional tokenization.
Privacy-first architecture for regulated tokenization
DTCC’s decision centers on the Canton Network’s institutional-grade privacy architecture and interoperable design. The network offers a configurable privacy model that lets participants control transaction visibility while retaining auditable records for compliance, balancing commercial confidentiality with regulatory oversight.
Its “network of networks” approach supports private, permissioned nodes that can interoperate with a broader ledger, enabling cross-system connectivity without exposing sensitive data. This design aims to connect multiple systems on a shared infrastructure while preventing unnecessary disclosure of commercially sensitive information.
DTCC plans to integrate Canton’s capabilities with its ComposerX platform suite to harmonize legacy systems with blockchain tooling. This approach seeks to reduce the need for wholesale infrastructure replacement while preserving the confidentiality standards required by institutions and maintaining auditability.
The SEC issued a No-Action Letter that permits DTCC to operate the tokenization service under specific conditions and defines a three-year horizon. The pilot’s scope includes tokenizing a focused set of U.S. Treasury securities, selected Russell 1000 stocks and several major index ETFs, with MVPs slated for early 2026 and a transition to full-scale service in the latter half of 2026.
The regulatory clearance explicitly limits the program’s initial perimeter and timeframe, creating a supervised environment to evaluate operational, legal and compliance considerations. By constraining scope and duration, the No-Action Letter creates a controlled setting to test tokenization without granting open-ended approval.
DTCC and its partners frame the initiative as a way to reduce operational friction and accelerate settlement. On-chain processing is expected to increase asset mobility, enable near-real-time collateral movement and shorten settlement cycles compared with T+1/T+2.
The project promises 24/7 trading capability and configurable auditability while preserving confidentiality for commercially sensitive data. These shifts could alter liquidity dynamics and improve collateral efficiency, while introducing new dependencies on privacy-preserving on-chain tooling, validators and oracle integrations. Regulatory and compliance risks remain central throughout the pilot. The No-Action Letter creates permissive space rather than open-ended approval, shaping which services are permissible and for whom.
Institutions will need to reconcile on-chain privacy controls with KYC/AML obligations and audit requirements, while monitoring how the pilot’s outcomes influence wider supervisory approaches. DTCC’s selection of the Canton Network marks a structured, regulatorily scoped step toward tokenizing critical U.S. market instruments, prioritizing privacy and interoperability.