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Wall Street’s Plumbing Goes Onchain as Morgan Stanley Tokenizes Securities
Morgan Stanley has begun tokenising US equities and Treasuries through the DTCC Tokenization Service, linking blockchain-based assets to established US market infrastructure. The move matters because it brings a major Wall Street bank into a developing market for digital securities while aiming to preserve the protections and rights attached to conventional holdings.
The service lets eligible firms turn securities held at the Depository Trust Co. into digital tokens and convert them back, with assets deliverable to selected wallets. It launched on 28 October and currently uses the Canton Network and DTCC’s private Besu network; more blockchains are planned for 2027. Morgan Stanley is one of 20 participants, and the DTC holds more than $114 trillion in assets; an IMF report cited in the article says tokenised shares remain less liquid and more volatile than traditional ones.
In short
- Morgan Stanley is tokenising US stocks and Treasuries through DTCC.
- The tokens are designed to retain the original securities’ rights and protections.
- Twenty firms have signed up, as the market remains relatively young.
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The case for
Tokenising equities and Treasuries through established market infrastructure could make transfers and settlement more efficient while preserving the rights attached to conventional holdings. Supporters may see Morgan Stanley’s participation as a measured way to develop digital securities, with the ability to convert tokens back and access limited to selected wallets.
The case against
Bringing securities onto blockchain networks may add technical and operational risks without yet showing clear benefits for investors. Critics could also worry that tokenised shares remain less liquid and more volatile, and that linking major financial institutions to a developing market could expose established systems to new vulnerabilities.
Explained simply
US shares and government bonds are normally recorded and transferred through established financial institutions. Tokenisation creates digital records, or tokens, that represent those securities and can be transferred using blockchain networks.
The Depository Trust & Clearing Corporation, known as the DTCC, supports the systems that hold and transfer many US securities. Its subsidiary, the Depository Trust Co., holds the underlying assets; eligible firms can use the new service to create tokens linked to them and convert them back.
Morgan Stanley is a major US bank, and its involvement connects a large financial institution to this developing market. The tokens are intended to retain the rights and protections of the conventional securities, though tokenised shares remain less liquid and more volatile than traditional ones, according to an IMF report cited in the story.