Tokenized Government Bonds Gain Ground on Canton Network
The process of putting government bonds on the Canton Network involves creating a digital token that represents a real bond held in custody, allowing banks and funds to transfer this token on a shared ledger. The bond itself remains unchanged, but its record is updated to reflect the tokenized form. This token can be traded, used as collateral, or exchanged for cash, with transaction details visible only to the involved parties.
Tokenization of government bonds works by recording an existing asset as a transferable entry on a blockchain. The DTCC Tokenization Service on Canton is a prime example. In 2025, DTCC's subsidiaries processed $4.7 quadrillion in transactions and held $114 trillion in custody. The tokenization process involves converting a Treasury held at DTC into a token, delivering it to a participant's chosen wallet, and allowing the holder to convert it back to traditional form. DTCC ensures that these tokens retain the same investor protections, entitlements, and ownership rights as the original securities.
Institutions are drawn to the Canton Network for its privacy features, one-step settlement, and faster collateral processes. Privacy by design ensures that each participant sees only the relevant parts of a transaction. Settlement is streamlined through delivery versus payment (DVP), where the bond and cash move together or not at all. Tokenized bonds can be pledged and released directly on the ledger, making them highly efficient for short-term loans secured by bonds.
In 2026, several key events demonstrated the practical applications of tokenized bonds on Canton. In January, Lloyds Bank issued tokenized deposits on Canton and used them to purchase a tokenized UK gilt from Archax. On July 1, Franklin Templeton transferred a tokenized U.S. Treasury to Virtu Financial for USDCx, a tokenized dollar, in a trade executed on Tradeweb. By October, DTCC scheduled the full launch of its Tokenization Service, covering Russell 1000 stocks, major index ETFs, and U.S. Treasury bills, notes, and bonds.