Morgan Stanley moves to tokenization: Stocks and Treasury securities on blockchain

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The system does not create new shares: it allows rights to existing securities to be converted into tokens transferable between registered wallets. This tokenization of finance is accelerating on Wall Street, even if not everyone likes it.

The DTCC Tokenization Service, or DTS, operates on securities held by the Depository Trust Company, a subsidiary of the DTCC specializing in their custody. Participants can convert these securities between a traditional form and representation on blockchain.

According to the DTCC, these “digital twins” retain the property rights, investor protections and economic rights of their traditional counterparts. DTC says it maintains more than $114 trillion in assets. This amount represents all of its assets in custody, and not the value of the securities already tokenized.

The service allows transfers 24 hours a day, seven days a week, between wallets registered with DTC. This availability concerns token transfers: it does not mean that all American stocks become tradable continuously on their usual markets.

The permitted scope includes certain Russell 1000 stocks, ETFs tracking major indexes, and U.S. Treasury securities.

Morgan Stanley joins a system to which twenty institutions have signed up to access, including JPMorgan, Citi, Bank of America, BNP Paribas, Fidelity, State Street and UBS. The service currently uses Canton Network and DTCC's private Besu network.

The objective is in particular to facilitate the movement of securities used as guarantees and to better connect traditional infrastructures to blockchain applications. Operations carried out this summer had already tested several uses, including securities lending and exchanges of tokenized stocks and bonds.

For Amy Oldenburg, head of digital assets strategy at Morgan Stanley, this experience must guide the development of the bank's capabilities. It also plans to support tokenized stocks on its alternative trading system in the first quarter of 2027. This is a announced timeline, separate from the current use of DTS.

The interest of the system lies in this continuity: institutions add a blockchain transfer method to existing securities, while retaining their holding framework. The scale of the amounts actually converted and of commercial uses now constitutes a more relevant measure than just the size of eligible assets.

Machine-translated from French