With major banks onboard, DTCC launches tokenized securities

Key insight: The DTCC, recordkeeper of Wall Street, is now offering the option to buy and sell tokenized stock on a blockchain. Forward look: The organization aims to create interoperability of tokenized assets across the industry. Processing Content The Depository Trust and Clearing Corp., Wall Street's record-keeper, has launched a securities tokenization service that lets investors trade stock on a blockchain at any time, including on evenings and weekends.

Twenty DTCC participants, including J.P. Morgan, Bank of America , Citi, Morgan Stanley and Fidelity Investments, have signed agreements to use the securitized tokens. Banks and other market participants can tokenize any security they have in their inventory and deposit them in a digital wallet.

Banks can hold digital wallets on behalf of their clients. The DTCC is the sole U.S. securities depository. It oversees $150 trillion dollars in assets on behalf of the U.S. markets and settles $4.3 quadrillion worth of securities a year.

"We're the buyer to every seller, the seller to every buyer," Nadine Chakar, global head of digital assets at the DTCC, told American Banker in a recent interview. "We manage risk, we manage custody." The DTCC was started 55 years ago by a group of broker-dealers facing a paperwork crisis: Bike messengers were riding up and down Wall Street moving paper certificates around.

The volume of paper was so great that the New York Stock Exchange had to close on Wednesday afternoons to process it all. The DTCC was set up to provide the market infrastructure for post-trade settlement in the United States. Moving into tokenized assets "was just a natural extension of doing what we do by using new technology and digital technologies as they've emerged," Chakar said.

According to the DTCC, its tokenized securities preserve all the shareholder privileges of a physical stock certificate, including voting rights and legal protections. The firm calls this a "digital twin." "We were very careful when we launched our tokenization service — it had to be firmly entrenched in the existing laws and regulations," Chakar said.

"So our 'digital twin' is an exact replica of the asset that we have today currently in custody." The holder of that asset needs to instruct DTCC to take it from a traditional format to a digital format and vice versa. The DTCC also maintains the nine-character CUSIP code that identifies North American stocks, bonds, and other financial securities for the purposes of trade clearance and settlement, in order to not dilute liquidity.

"You still have the same rights," Chakar said. "You get paid your dividends, you can vote your proxies." The only differences are that a tokenized stock lives on a blockchain, it's programmable, and it can be sold or moved at any time. "It gives you flexibility on how to trade it and how to make it more accessible or do different things with it," Chakar said.

"Some people create different constructs to extract more yield." Other versions of tokenized securities exist. Robinhood, for instance, issues tokens that reference the price of a stock, but do not represent the actual stock and do not come with equity ownership or voting rights. This distinction surfaced in a public squabble in September, when the CEO of the theater chain company AMC, Adam Aron, objected to the way Robinhood Markets began offering tokenized debt securities for his company without its authorization.

The tokenized debt securities do not represent a stake in AMC and do not come with voting rights or dividends, which Aron says interferes with the company's relationships with its shareholders. Robinhood's CEO Vlad Tenev responded that his company issues tokenized stocks outside the U.S. under Regulation S, so they don't require issuer approval, and that once companies have issued shares, they give up control over them.

Robinhood has not yet tried to offer tokenized securities in the U.S. The Securities Exchange Commission in January offered a definition of tokenized securities that sanctioned both versions of the concept. Banks need a strong legal framework around tokenized securities, according to Nadine Teychenne, global head of tokenised securities and crypto at Citi.

"It's important for the consumer to understand what they're actually buying," Teychenne told American Banker in a recent interview. She predicts the industry will move toward the "digital twin" form of tokenized securities, which is being used by the DTCC. The DTCC started developing tokenized securities in 2023, when it bought Securrency, a company that Chakar was leading at the time.

In 2025, the DTCC received a no-action letter from regulators allowing it to proceed with the tokenization service, which it piloted in July. The DTCC's hypothesis is that tokenized and non-tokenized securities will coexist for some time, so it intends to keep supporting the settlement and clearing of both.

It's also working on interoperability and working with multiple blockchains. It's currently integrated with the Canton Network and DTCC's private Besu network, with additional networks to be added in 2027. "There is not one blockchain that can handle the amount of volume that we need," Chakar said.

To monitor all the tokens, which are smart contracts, the DTCC has created a token component called the Compliance Aware Token framework. "We ask for a participant to register their wallets with us," Chakar said. "We don't know if it's yours or your client's wallet, but what we do know is that it's a good wallet." "We've done the AML/KYC look," she added, referring to anti-money-laundering and know-your-customer compliance obligations, "and then we just monitor the movements of that token." Executive Editor, Technology Penny Crosman is Executive Editor, Technology at American Banker.

She is based in New York. She guides technology coverage at American Banker and... Read full bio