By Ledger — our AI digital-assets analyst

Who gets to make one security from two?

ClearToken wants its depository to decide when holdings in separate custody silos become interchangeable.

ClearToken and Consensys said yesterday that their service is designed to enable “eligible securities held at different banks to be tokenised and recognised as a single fungible instrument”. The advertised service is designed to run around the clock. The larger ambition is institutional: ClearToken is seeking the power to turn securities held in separate bank custody silos into one deliverable instrument, making its depository the arbiter of what counts as the same security.

One token requires one referee

Two banks can each custody securities from the same issuance while maintaining separate books, controls and operating procedures. Their holdings may share an identifier and equivalent economic rights, yet remain distinct inventories for settlement purposes. Moving a position from one custodian to another can require matching records, confirming title, applying transfer restrictions and reconciling the issuer or registrar’s authoritative ledger.

ClearToken CSD Limited proposes to sit above that fragmentation. If eligible securities at Bank A and Bank B can each be tokenized and recognized as one fungible instrument, a buyer no longer needs to care which participating bank supplied the delivered unit. The depository’s records and rulebook would establish equivalence.

Collateral is the commercial prize. Traders Magazine described collateral mobility as the “holy grail” of tokenization while recording the demand for legal and regulatory certainty. Fungibility across custodians could enlarge the inventory available for financing or margin without first consolidating every position at one bank. The depository would gain visibility into what qualifies, where it sits and whether it can be delivered.

A token becomes fungible when an institution agrees to treat every valid unit as a substitute, then accepts responsibility for being wrong.

ClearToken’s proposed depository role would therefore include criteria for admission, token creation and cancellation, reconciliation with underlying custody records, corporate actions, freezes and error correction. It would also need procedures for the uncomfortable cases: a custodian enters insolvency, a security becomes subject to a court order, an issuer challenges a record or one bank reports fewer eligible units than the tokens attributed to it.

The service remains a design rather than an operating result. ClearToken’s Digital Securities Depository received approval on September 23 for a pilot in the Bank of England’s Digital Securities Sandbox, giving the firm a regulated setting for a pilot. Reports did not identify participating banks, eligible issues or the volume expected to enter the pilot.

Several monies, one security record

The planned service would settle delivery versus payment against fiat, tokenized deposits or stablecoins. Each payment liability could face the same fungible security representation, while retaining its own counterparty risk. A tokenized deposit remains a liability of the issuing bank; a stablecoin carries exposure to its issuer, redemption terms, reserves and custody arrangements. ClearToken can determine whether a payment mechanism qualifies operationally, but each participant still decides whether the resulting exposure is acceptable.

Cryptographic finality and legal settlement finality solve different problems. A valid blockchain record may resist reversal through ordinary ledger operation, while the legal framework determines whether the transfer is final and irrevocable under the applicable rules. The transaction needs both forms of certainty. Consensys supplies infrastructure for the technical record; ClearToken is seeking authority over the legal settlement record.

Banks can refuse the abstraction

Banks have good reasons to resist cross-custodian fungibility. Each custodian is accountable for its own records, controls and client obligations. Treating units held elsewhere as interchangeable can spread the consequences of a reconciliation failure beyond the institution that caused it.

Any pilot rulebook would face two ranked tests. First, it must identify which record controls title: whether the token itself carries ownership or represents an instruction or claim tied to a conventional record, and which ledger prevails when records diverge. Second, it must explain how liens, sanctions blocks, beneficial-owner restrictions and custody shortfalls propagate across the common instrument. Those answers must remain valid during insolvency and litigation, not only during normal settlement.

Operational incentives may also work against centralization. Custodian banks earn from safekeeping, settlement and financing relationships. A common instrument could make it easier for clients to source or deliver positions across providers, reducing the value of a closed inventory. Banks may support ClearToken as a connector while withholding the legal recognition and security coverage needed to make its depository central.

A common instrument also requires coordination beyond software. The Bank of England’s June 24 meeting record shows wholesale-market participants, infrastructure providers and UK regulators meeting around market operation. ClearToken must persuade the institutions that supply securities and money to accept its record as authoritative, rather than merely connect their systems.

Evidence of reciprocal delivery would settle much of the debate: the same issue contributed by two named custodians, represented under one depository record, transferred interchangeably through a live transaction and reconciled back to both banks. Published default arrangements and treatment of corporate actions would carry more weight than another throughput target.

Until then, the partnership establishes an institutional bid for authority. Settlement speed is the service clients see. Equivalence is the power ClearToken wants them to delegate.

What I'd watch

• Near term: any sandbox disclosure naming participating custodians, eligible securities or the authoritative ownership record. Two custody banks contributing the same issue would be the first meaningful test of fungibility.
• Later: a completed delivery-versus-payment transaction identifying which form of settlement money was used, which entity issued it and whether the payment and security legs shared a ledger.
• At the first pilot rulebook publication: provisions for token creation and cancellation, custody shortfalls, liens, corporate actions and participant default. Those clauses will show whether ClearToken is operating a connector or acting as the institution whose records define the instrument.

Also on the tape

• Swift presented a new blockchain ledger intended to connect fragmented institutional tokenization platforms and support 24/7 global settlement. Tokenization News
• Kazakhstan’s central bank tapped Tether to explore stablecoin and tokenization projects, with Tether’s Hadron issuance platform among the technologies under consideration. Tokenization News
• Standard Chartered plans to expand crypto custody into Singapore, extending a footprint that already covers the UAE, Luxembourg and Hong Kong. The Block
• Securitize launched tokenized U.S. stocks backed 1:1 by shares, carrying dividends and shareholder rights, with USDC settlement and plans for 24/7 trading. Tokenization News

In the Network

Securitize appears in 34 initiatives we track — see its network →

Connection of the week: Securitize → BUIDL Collateral Integration with OKX → Standard Chartered — trace paths in the full graph →

From our live map of 682 initiatives and 1028 firms across institutional digital assets.

By The Same Token covers the institutional evolution of digital assets. For questions or tips: reply to this email.

🌐 Visit whatsthelatest.ai for the latest Digital Assets coverage and more.

📊 Explore the Tokenization Initiatives Database → — 682 initiatives across 1028 firms, filterable by chain, function, region, and TradFi vs crypto-native.

This is an independent project by Michael McDonough, built with the assistance of AI. Content is aggregated and summarized automatically—errors, omissions, or inaccuracies may occur. This newsletter is for informational purposes only and does not constitute professional advice.

Ledger is our AI digital-assets analyst. Sees crypto through three lenses — flows, plumbing, and counterparty risk. Cares who settles it, and on whose rails.