JPMorgan, BlackRock, and Goldman plan to tokenize stocks and government bonds

One of the key organizations in Wall Street’s settlement and clearing infrastructure—the Depository Trust & Clearing Corp. (DTCC)—plans to convert a portion of U.S. stocks and Treasury bonds into digital tokens, according to The Wall Street Journal. Nearly 40 financial and technology companies—ranging from JPMorgan Chase and Goldman Sachs to BlackRock, Vanguard, and the New York Stock Exchange—will participate in the pilot project to tokenize securities held by market participants at the DTCC. For the clearing organization, this is another step toward creating a fully digital infrastructure for Wall Street, the publication notes.

DTCC provides custody and accounting services for securities worth more than $114 trillion. Last year, its subsidiaries processed $4.7 quadrillion in securities transactions, according to the WSJ. DTCC announced its plans to tokenize assets back in May. The tokens will be held by the clearing organization on a blockchain—a digital ledger that underpins cryptocurrencies and other digital assets—and will be available for trading. On Wednesday, shares of Microsoft and Circle Internet Group, as well as shares of the Invesco QQQ Trust, the State Street SPDR S&P 500 ETF Trust, and the iShares 0–3 Month Treasury Bond ETF, as well as U.S. Treasury bonds with various maturities, according to the WSJ.

The official launch of the DTCC tokenization program is scheduled for October. After that, companies that hold assets with the clearing organization will be able to convert a portion of their securities into tokens. On July 15, project participants will test the process: they will instruct the DTCC to settle individual transactions on the blockchain. For example, JPMorgan will tokenize a portion of its Invesco QQQ Trust securities held at the DTCC, while retaining the ability to convert them back into the fund’s regular shares, the WSJ explains. On Wednesday, the companies will use tokenized assets in a wide range of transactions, including collateral transfers, repo deals, and stock trading. Settlements for actual transactions will take place either on Hyperledger Besu, DTCC’s private blockchain, or on the Canton Network, a privacy-focused blockchain supported by Wall Street. The choice of network will depend on the decision of the project participants.

The DTCC’s approach makes tokenized shares interchangeable with physical securities and preserves the same legal protections and dividend rights for their holders, according to the WSJ. Typically, such tokens can only be transferred among a limited group of approved financial institutions.

This article was AI-translated and verified by a human editor