DTCC has argued that the next phase of institutional tokenization depends on interoperability across traditional and digital financial infrastructure.
In a new paper developed with Citi and Swift, DTCC focuses on the ability to connect tokenized assets, cash, collateral and data across separate systems and networks.
The paper argues that tokenization is moving from experimentation toward implementation and that connected infrastructure will be necessary to prevent the market from fragmenting into isolated platforms.
This gets closer to the harder part of institutional tokenization.
Creating a digital representation of an asset has become relatively straightforward.
Moving that asset through the systems where institutions actually fund, trade, custody, settle and use collateral is more difficult.
An asset can be tokenized and still remain operationally isolated.
If it cannot move to the custodian used by an investor, cannot be financed by the institution holding it, cannot settle against an accepted form of cash or cannot be recognised inside existing collateral workflows, much of the theoretical efficiency remains outside the transaction.
Interoperability therefore needs to be judged at more than the protocol level.
Two blockchains communicating with each other does not automatically mean two financial institutions can complete a regulated transaction.
The relevant connections include identity, asset eligibility, control, books and records, cash, settlement finality and the systems used for risk management.
This is why incumbent infrastructure providers matter in the discussion.
DTCC already sits inside existing post trade workflows. Its role gives it a different problem from a new blockchain network. The objective is not to prove that assets can move digitally. It is to connect digital assets to the infrastructure that already determines whether an institutional transaction can complete.
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The next phase should be judged by production connections.
Standards and white papers can define the problem, but meaningful interoperability needs live assets, cash and collateral moving across different environments without creating another reconciliation layer.
The useful metric is not the number of networks connected.
It is whether institutions can complete the same financial obligation across those networks with consistent control and records.