DTCC, Canton, and the Next Phase of Tokenized Market Infrastructure

DTCC and the significance of the announcement

Today, the Depository Trust & Clearing Corporation (DTCC) announced that it will use the Canton Network as the underlying infrastructure to tokenize DTCC-custodied securities, including US Treasury securities. The announcement comes as privacy-enabled blockchain networks mature and as institutional-grade risk management capabilities — including those provided by TRM Labs — are being integrated directly into these environments. Together, these developments signal an important shift in how regulated financial markets are beginning to adopt on-chain infrastructure.

DTCC — the Depository Trust & Clearing Corporation — occupies a central position in the US and global financial system. It clears and settles the vast majority of US securities transactions and maintains the systems of record that underpin ownership, netting, settlement finality, and market stability. On a daily basis, DTCC processes transaction activity measured in quadrillions of dollars. Its role is foundational, and changes to its operating infrastructure carry systemic implications.

For that reason, DTCC’s decision to tokenize US Treasury securities on Canton is notable not simply as a technological development, but as an institutional signal. The growing adoption of Canton by systemically important market participants, including DTCC, was a key factor in TRM Labs’ decision to integrate with the network earlier this year. DTCC’s mandate centers on risk reduction, operational resilience, and the integrity of financial markets, and its adoption of new technology reflects an assessment that the system can function reliably at scale, under regulatory supervision, and within established legal frameworks.

Regulatory context: Tokenization within the supervisory perimeter

The initiative is supported by a no-action letter from the US Securities and Exchange Commission, providing regulatory clarity for this use case and reinforcing that the effort is being pursued within the existing regulatory perimeter. This regulatory posture is significant. It demonstrates that supervisors are prepared to allow blockchain-based systems where governance, controls, and investor protections are clearly established, rather than requiring such activity to occur outside of regulated markets.

Why Canton was built for regulated financial markets

The network DTCC selected for this work is Canton, and its design addresses a challenge that has constrained blockchain adoption in regulated finance for more than a decade.

Many blockchain architectures were developed for open, permissionless environments in which transaction data is broadly visible. While this model has advantages in certain contexts, it is misaligned with the requirements of regulated financial markets. Institutions cannot publicly expose positions, counterparties, or liquidity movements, and regulators require clear governance, accountability, and enforceable controls.

Canton was designed specifically to operate within these constraints.

Privacy, interoperability, and institutional design

Canton is a privacy-enabled, permissioned blockchain that allows financial institutions to transact on-chain while retaining granular control over data visibility. Participants can determine which counterparties, service providers, and assets are able to view specific transaction information, rather than broadcasting activity by default. This selective transparency mirrors existing market practices, where information sharing is governed by legal, contractual, and supervisory requirements.

Importantly, Canton does not sacrifice interoperability in order to achieve privacy. Institutions can operate within their own domains, preserve confidentiality, and still coordinate transactions across the network. Assets and obligations can move together, settlement can occur atomically, and reconciliation processes can be streamlined without exposing sensitive market data. This balance between privacy, coordination, and control is central to Canton’s relevance for regulated financial markets.

Tokenizing US treasuries: A systemic use case

The asset class involved underscores the significance of this design choice.

US Treasury securities sit at the core of the global financial system. They serve as primary collateral across markets, support liquidity and funding operations, and play a critical role in monetary policy transmission. Tokenizing Treasuries is therefore not simply about improving operational efficiency for a single product. It is a test of whether distributed ledger technology can support the most systemically important instruments in finance without introducing new operational, compliance, or systemic risks.

Risk does not disappear on-chain

Infrastructure alone is not sufficient.

As financial activity moves on-chain, including on privacy-preserving networks, risk does not disappear. High-value assets attract fraud, sanctions evasion, and other forms of illicit activity, particularly as liquidity increases and systems become more interconnected. If tokenized markets are going to scale responsibly, risk management and compliance capabilities must be integrated into the ecosystem from the outset rather than added after deployment.

Embedded risk management on privacy-enabled networks

This is where TRM Labs’ integration with the Canton Network is particularly relevant.

Canton’s privacy-first architecture means that traditional blockchain monitoring approaches, which rely on full public transparency, are not directly applicable. Effective oversight in this environment requires tools that can operate within permissioned systems, respect confidentiality, and still provide meaningful insight into sanctions exposure, fraud, and illicit behavior. TRM’s integration is intended to support that balance, enabling institutions operating on Canton to manage risk and meet compliance obligations without undermining the privacy and governance features that make the network viable for regulated use cases.

Embedding risk management into the infrastructure itself supports supervisory oversight, enables timely intervention where necessary, and reduces the likelihood that tokenized markets develop blind spots as they grow in scale and complexity.

Implications for the future of market infrastructure

Stepping back, today’s announcement is less about a single network or pilot and more about the direction of financial market infrastructure. The next phase of on-chain finance is unlikely to be defined by maximal transparency or ideological design choices. Instead, it will be shaped by systems that reflect how markets function in practice, that align with regulatory and risk management requirements, and that are capable of operating safely at scale.

Canton is significant because it was designed with those constraints in mind. DTCC’s decision to build on it — supported by regulatory clarity from the SEC and complemented by embedded risk management capabilities — suggests that tokenization is moving beyond experimentation and toward implementation within the core of the financial system.

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Read how TRM partners with Canton Network to strengthen risk management on privacy-enabled networks.