A recent ValueExchange report quantifies the cost of today’s inefficient collateral management. The problems and cost drivers cited won’t be a surprise to anyone in this business: fails, lack of settlement certainty, manual processes, and more.

But the numbers? The opportunity cost is even higher than I expected.

The average firm is pledging and managing up to $74Bn in collateral, yet…
25% of a firm’s collateral (USD25Bn) is either excess or not remunerated overnight today.

7% of firms are posting excess collateral for buffering ($4Bn). 

35% of firms are posting more than half of their collateral overnight.

Collateral can’t be utilized or mobilized efficiently because 70% of firms struggle with delivery. And even as earnings potential is lost, high operating costs - up to 57% of the cost of a trade - are eroding profitability.

The solution? Tokenization

There’s a broad consensus that tokenization will address or even eliminate many of these pain points. 94% of respondents expect collateral mobility to improve and 92% expect operating costs to drop.

Beyond the savings, tokenizing collateral is expected to increase interest earnings – up to  $346M per annum for Tier 1 firms and multiple millions for smaller firms. 

Instant DvP was cited by 81% as the key driver. Settlement certainty creates balance sheet savings by enabling real-time lending, repo and collateral and facilitating intraday borrowing and financing. Collateral mobility improves and overnight postings and excess buffers decline.

Repos are the highest priority use case, and high quality liquid assets (HQLA) and tokenized funds (especially money market funds) are seen as core targets for tokenization. They will be used, along with stablecoins, as digital money.

Why wait? 

While survey participants expect significant progress over the next three years, we are moving now. Using Canton Network, a growing group of market participants has completed two sets of weekend trades using on-chain, real world assets.

We’ve proven that the market can:

• Complete live weekend trades
• Bring U.S. Treasuries (USTs) on-chain for use in back-to-back repos vs. multiple stablecoins
• Transact fully on-chain, from creation through redemption
• Settle dynamically to mobilize collateral and finance after hours
• Reuse collateral across counterparties in real time

With these successful trades behind us, we’re expanding to include cross-border trades, other HQLAs, more sources of digital money, and additional asset classes. 

In short, the industry is tackling all the pain points identified by the survey participants, on Canton. 

These trades show that the operational challenges and opportunity costs of current collateral management can be addressed by bringing real world assets on-chain. And it’s happening today – DTCC and Digital Asset are partnering to tokenize DTC-custodied USTs on the Canton Network in the first half of 2026. 

As we start the new year, the much-anticipated transformation of collateral and capital markets is finally here. 

Learn more:

The Depository Trust & Clearing Corporation and Digital Asset to bring onchain DTC and Fed eligible securities to Canton, Dec 17 2025

The Canton Network’s Industry Working Group Demonstrates Next Phase of Onchain U.S. Treasury Financing on Canton Network, Dec 9 2025

Digital Asset and Industry Working Group Compete Groundbreaking On-Chain US Treasury Financing on Canton Network, Aug 12 2025