The U.S. Securities and Exchange Commission (SEC) issued a no-action letter to the Depository Trust Company (DTC), a subsidiary of the Depository Trust & Clearing Corporation (DTCC).
This letter provides regulatory relief, allowing DTCC to proceed with a three-year pilot program for tokenizing certain real-world securities on approved blockchain networks. The pilot focuses on highly liquid securities, including: Stocks from the Russell 1000 index.
DTCC will create tokenized representations (1:1 mirrors) of securities already held in its custody. These tokens will maintain the same ownership rights, investor protections, and entitlements as traditional book-entry securities.
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Transfers occur on pre-approved permissioned blockchains, but DTCC retains control over the underlying assets and can fallback to its legacy systems. The service is expected to launch in the second half of 2026.
This is a controlled pilot, limited to DTC participants like broker-dealers, custodians with registered wallets. It’s designed to test benefits like faster settlement, improved collateral mobility, and potential 24/7 access while preserving regulatory safeguards.
This marks a significant step toward integrating blockchain into mainstream U.S. financial infrastructure, as DTCC handles custody for over $100 trillion in securities and settles quadrillions in transactions annually.
Tokenized securities are digital representations of traditional financial assets like stocks, bonds, treasuries, or ETFs issued and recorded on a blockchain. They represent 1:1 ownership rights to the underlying asset while leveraging blockchain’s distributed ledger technology.
This is distinct from cryptocurrencies, as tokenized securities remain regulated like traditional ones. Traditional securities often settle in T+1 or T+2 days, involving multiple intermediaries and risking delays or failures. Tokenization enables near-instantaneous settlement via smart contracts, reducing counterparty risk, administrative overhead, and costs.
High-value assets can be divided into smaller tokens, allowing investors to buy fractions like a tiny share of expensive real estate or blue-chip stocks. This democratizes access, lowers entry barriers for retail investors, and opens markets to global participants without geographic restrictions.
Illiquid assets such as private equity or real estate become easier to trade on blockchain platforms. Combined with potential 24/7 markets, this enhances liquidity, especially for traditionally hard-to-sell securities.
Blockchain’s immutable ledger provides a tamper-proof record of ownership and transactions, reducing fraud, errors, and disputes. All parties can verify history in real-time.
Assets tokenized on the blockchain shows diverse asset classes and enhanced transparency. By automating processes with smart contracts and removing iintermediaries like brokers, custodians in some cases, tokenization lowers transaction fees, compliance costs, and operational expenses.
Tokens can be used more flexibly as collateral across platforms or in DeFi. Smart contracts enable programmable features, like automated dividends or conditional transfers. In the DTCC pilot context, this includes better collateral use, new trading models, and potential 24/7 access.
These benefits are driving institutional adoption, as seen in the recent DTCC pilot for tokenizing U.S. stocks, ETFs, and treasuries. While challenges like regulatory hurdles and technical risks remain, tokenization is poised to modernize capital markets by blending blockchain efficiency with traditional investor protections.
Coverage from Bloomberg, CoinDesk affiliates, and others confirms the news without contradictions. This is not a full overhaul of the system but a regulated experiment to explore tokenization’s efficiencies.