The DTCC is exploring the potential of issuing a stablecoin according to a report from The Information. A DTCC spokesperson confirmed that it is “monitoring policy developments in the U.S. Congress and regulatory agencies, and will continue to assess our options, including the potential of issuing a DTCC stablecoin, if needed,” according to the Block. We contacted the DTCC but didn’t receive a response in time for publication.
The DTCC is the world’s largest central securities depository (CSD) and central counterparty (CCP) processing more than $3 quadrillion in post trade transactions annually. It handles the settlement of nearly all transactions on major US stock exchanges.
DTCC tokenized money activities
It’s worth putting this report in context, as the organization is a participant in other major institutional initiatives. The most noteworthy is Fnality, the institutional settlement token that is backed by reserves held at the central bank. Any institution that wants to use the token for settlement would transfer money to the Fnality Bank US central bank account and mint the token. In the UK, the only drawback is this would only be accessible by firms with access to central bank accounts. However, the current version of the US GENIUS Act stablecoin legislation also supports central bank money as reserves and has no such restriction.
Fnality is backed by more than 20 global institutions including the DTCC, Nasdaq, Goldman Sachs and numerous systemically important banks. It is already live in the UK and in April, Fnality Bank US received a Connecticut temporary certificate authority. In other words, it has an 18 month interim approval as a state chartered innovation bank.
In a separate initiative, banks are exploring interoperable tokenized deposits via the Regulated Settlement Network (RSN), with the DTCC contributing to that project. Plus banks are also reported to be exploring a joint stablecoin, potentially via The Clearing House.
Another piece of context is in April the DTCC announced plans to launch a tokenized collateral platform and ran a mock demonstration. The simulation showed the use of the Fnality dollar and pound, as well as Societe Generale’s EURCV stablecoin as collateral.
The ability to instantly move tokenized collateral, including stablecoins, is viewed by institutions as an important way to reduce various risks. It means variation margin for trading can be posted almost instantly, without needing to use cash. Instead tokenized government bonds, or stablecoins could be used.
These developments reflect broader institutional recognition of tokenization’s advantages.
Practical stablecoin issuance steps
For the DTCC specifically, implementation would be relatively straightforward from an infrastructure standpoint. It already has a bank subsidiary, which unlike Fnality Bank US, has full authorization. The Depository Trust Company (DTC), which is one of its main subsidiaries, operates as a limited purpose trust company under New York State banking law. It has access to a central bank account because it enables huge volumes of settlement using Federal Reserve money.
Hypothetically, if the DTCC were to issue a stablecoin it could be a very high quality one, using a similar model to Fnality. In other words, perhaps backed by central bank money. Typically stablecoins are mainly backed by Treasury bills, which are usually very stable. But there have been volatile episodes in the money markets, and central bank reserves side steps this risk.
However, the downside is that Fedwire, the high value real time gross settlement system (RTGS) is not available 24/7. By contrast, Fednow operates 24/7 but is retail-focused, has low transaction limits and is not really designed for DTCC volumes. The US Treasury markets also don’t function 24/7. This simply means institutions that want to transact out of hours might need to keep some buffers.
Stepping back, with the Commodity Futures Trading Commission (CFTC) launching tokenized collateral trials, the CME exploring tokenized collateral and NYSE owner ICE starting to experiment with stablecoins, the time is ripe for an institutional stablecoin, whether from Fnality or the DTCC.
