The largest securities clearing agency in the United States, DTCC, launched a real-world blockchain test this week, involving assets such as stocks and government bonds. This is the first time this largest U.S. clearing agency has validated the tokenization process in a real environment after years of exploration, with a full launch targeted for October.

Written by: Long Yue, Wall Street Insight

The stock clearing system on Wall Street is undergoing a limited but significant blockchain test.

The largest securities clearing agency in the United States, DTCC (Depository Trust and Clearing Corporation), will conduct a demonstration of blockchain trading this week, involving assets such as stocks and U.S. government bonds. This is the first time DTCC has tested the feasibility of using blockchain to record ownership in a real production environment after years of exploration, with over 50 financial and crypto institutions participating in the project.

However, DTCC has also made it clear: the current cost of blockchain is too high to support the daily settlement scale of hundreds of trillions of dollars in the U.S. stock market, and the existing clearing system will not be replaced in the short term.

Limited testing scale, full launch no earlier than October

This testing is limited to a one-day production trade and is not a full rollout.

DTCC received a "No-Action Letter" from the U.S. Securities and Exchange Commission (SEC) at the end of 2025, valid for three years, allowing it to launch new tokenization services to create blockchain records for specific securities. The scope includes Russell 1000 index constituents (representing the largest publicly traded companies in the U.S.), ETFs, U.S. short-term government bonds, bonds, and notes.

The purpose of this real-world test is to verify whether the blockchain process can operate normally and whether market participants can effectively operate it. DTCC stated that the full launch target is set for October of this year.

The objects of tokenization are stocks already held in custody accounts. DTCC plans to offer financial institutions the option to convert these stocks into tokens on the blockchain, allowing institutions to directly transfer tokens between each other for purposes such as collateralized financing.

Why the existing clearing system cannot be replaced

To understand this limitation, it is necessary to first grasp the operating logic behind stock trading.

Once a stock transaction is completed, it must go through three stages: confirmation, clearing (accounting for the capital gaps of the parties), and settlement (completing the actual delivery of stock and cash). DTCC is currently at the core of this system.

The most critical mechanism is netting: DTCC offsets the buy and sell orders of each institution for the day, ultimately only needing to transfer a net amount instead of settling each transaction individually. This mechanism compresses approximately $200 trillion of market activity each day to about 2% of the funds that actually need to be moved.

The logic of blockchain is exactly the opposite—it is better suited for processing transactions one by one. Tom Sullivan, head of DTCC's digital asset solutions, has stated directly: “Relying entirely on a model of settling each transaction would not work at this scale. There is not enough money in the system to support it.”

DTCC has clearly stated that it does not intend to change the stock clearing process with tokenization; approximately 98% of stock transactions will still be processed through netting each day. Cash settlements will continue to rely on the Federal Reserve's Fedwire system, not blockchain.

Larry Tabb, head of market structure research at Bloomberg Industry Research, assesses that the scale of DTCC tokenized stocks "will not even reach half a percentage point of the value of traditional stocks," and "it will not threaten the status quo; this is very complex."

The most realistic use: collateral and financing

Since it cannot disrupt the clearing system, where does the value of blockchain lie?

DTCC's answer is: the collateral and financing markets.

After stocks have completed clearing and settlement, they are typically held at a central custodian, which can be used for collateralized financing or borrowing for short selling. After tokenization, institutions can more rapidly transfer rights to these stocks on-chain for use as collateral to obtain funds, enhancing capital turnover efficiency.

This scenario, though not as grand as "disrupting the clearing system," involves a substantial market for collateral and financing, which has genuine demand for speed and flexibility.

Bridging the crypto market: a breakthrough in weekend settlements

Another promising direction is connecting the traditional stock market with the crypto market.

Currently, crypto tokens representing stocks like Tesla and Apple have been issued to overseas investors, backed by real stocks held at brokerages or custodians—similar to how the $300 billion stablecoin market allows global users to hold U.S. dollars.

According to RWA.xyz data, Ondo Finance and Kraken's xStocks have issued approximately $1.3 billion of such tokens. Last month, the crypto exchange Binance also launched the bStocks product, with its head of exchange and trading operations, Shunyet Jan, stating that a major appeal of bStocks is that "it can be traded on weekends."

However, the existing model has a pain point: the stock market is closed on weekends, and the stocks behind the tokens cannot be settled in real time. For example, if there are significant price fluctuations over the weekend for Ondo, the settlement can only be completed when the market reopens on Monday, which could greatly increase transaction costs or even make settlement difficult.

Ondo CEO Ian De Bode stated that the company hopes to eventually use DTCC tokenized stocks as the underlying assets for its stock tokens. DTCC’s system could allow some stock rights to circulate over the weekend, making weekend settlements "significantly easier for us."

A lesson from the past: the lessons of Project Ion

This is not DTCC's first attempt at blockchain.

In 2022, DTCC announced the launch of "Project Ion," teaming up with 16 institutions including JPMorgan and Robinhood to explore blockchain-based stock transaction settlements. However, according to a 2024 report from The Information, the project was shelved after the pilot ended—because clients were already satisfied with the existing system and had no motivation to switch.

This history highlights the core challenge facing new services: beyond technological feasibility, how to genuinely motivate institutions to migrate is the key variable that will determine how far tokenization can go.