Tokenised Assets Are Only as Liquid as Their Exit

Tokenised securities can now trade around the clock, settle on-chain and move between networks. None of that automatically makes them liquid. 

An investor still needs someone on the other side of the trade, a price that tracks the asset behind the token and a way back to cash or to the conventional security when the on-chain market is thin. Without that route, a token that trades every hour of the week can still be hard to sell at a fair price.

The newest market infrastructure is aimed at that gap. This month, The Depository Trust & Clearing Corporation (DTCC), the main post-trade market infrastructure for the global financial services industry, will launch its tokenisation service allowing institutions to convert securities held at its depository into digital tokens and back. 

Participants using the DTCC’s new service, will be able to swap traditional securities with their tokenised versions while maintaining the same investor protections and entitlements as traditional securities. The conversions will initially run on Canton, a public blockchain, and DTCC’s private Besu network, with plans to add support for more blockchains like Stellar (XLM) in the future.  

The Depository Trust Company (DTC) remains the legal depository, so the new service does not amount to the permissionless issuance of U.S. securities and is restricted to approved wallets. Retail crypto platforms do not suddenly custody the Russell 1000. What will change is there is a new token layer for firms that opt in.

The Redemption Issue

One of the key issues with tokenised securities is allowing for liquidity across a 24/7 trading week — particularly how quickly, and on which days, a holder can convert a token back into cash. In this case, a participant in the programme instructs the DTC to de-tokenise. DTC burns the tokens in the registered wallet, debits the securities from its Digital Omnibus Account, and credits them to the participant’s ordinary DTC account. The underlying shares never leave custody.

This is likely to work well within the permissioned environment created for the DTCC’s programme. Other jurisdictions, however, are already creating new environments that allow for greater trading and retail participation in the tokenisation trend. 

In Hong Kong, the SFC’s April circular on trading tokenised funds through licensed platforms called on issuers to use their “best endeavours” to assign at least one market maker for each product. They also warned investors of “potentially very thin trading and large premium/discount to NAV”, particularly outside local market hours and at weekends. When dealing with secondary markets, a fund token is as deep as the market maker quoting it.

In the US, the SEC’s Tokenized Securities Venues must run automated market maker (AMM) pools on public, permissionless blockchains, with access limited to approved participants. The order notes that AMM prices are generally set based on the ratio of the quantities of the assets in a liquidity pool without directly considering external pricing.

The token will track the share price only if arbitrageurs can trade between the two markets and close any price gap. Venues may operate around the clock but must halt whenever the primary listing exchange halts the stock. 

On weekends, when that exchange is closed, the pool has no live price to follow. The order also does not require tokens to be convertible into conventionally held shares, so each market will depend on whether a market maker can turn its tokens into shares and back at a known cost.

DTC’s approach starts from its own books. Under a no-action letter SEC staff issued in December 2025, tokens representing DTC-held securities can circulate on approved public and private blockchains, but DTC’s off-chain LedgerScan record “would constitute DTC’s official books and records”. Tokens move only to wallets that participants register and supported chains must let DTC force a conversion or transfer through a “root wallet” when a reversal is required.

The model keeps one authoritative record off-chain. Tokens can sit on several chains without splitting ownership, because the register never moves, but they go only where the record-keeper permits.

Claims on Commodities

When it comes to physical commodities, a set of different challenges emerge. The SEC’s exemption excludes synthetic products and bars venues from extending credit, so the case for tokenised commodities rests on novel structures. 

A tokenised commodity can be backed by, or linked to, a stock of industrial metals or oil, for example, among other structures. A security linked to stockpiles, financing agreements, production revenue, processing capacity or supply-chain infrastructure is often the more workable option.

The depth of these markets will depend less on which chain a token sits on than on how widely issuers and intermediaries open the route between token, share and cash. DTCC’s launch and the first SEC-exempt venues will show how many market makers can reach each token, and whether they can convert it back into the underlying.

Across commodities, fixed income and equities, tokenisation has moved from discussion into real-world experimentation, under close supervision, and each model has its own answer to the exit. 

Treasury funds rely on redemption with the issuer. Hong Kong provides a market maker for every tokenised fund it allows to trade. Gold tokens lean on established vaults, while newer commodity tokens have to build that route themselves. 

In every case, an issuer, a market maker or a central intermediary controls the route, and that control is what ties a token to a recorded claim on the underlying asset. Regulated securities venues that verify every holder, such as Bitfinex Securities, start from the same premise.

Issuing a token is now the easy part. The test for the next phase is whether investors can trade it at a fair price and get out when they need to, at a weekend or in a falling market, without waiting for a redemption window. DTCC’s launch and the first SEC-exempt venues will provide the first evidence.