SEC Spurts Blockchain Push as DTCC Gets Green Light for Tokenized Securities

The SEC has granted the Depository Trust & Clearing Corporation (DTCC) a no-action letter to tokenize stocks, exchange-traded funds, and bonds on blockchain platforms. The move is seen as a pivotal step toward integrating traditional securities into a blockchain-based financial ecosystem according to Bloomberg. The approval allows DTCC to custody and recognize tokenized equities and real-world assets on-chain, with the service expected to roll out in the second half of next year according to Bloomberg. This development could enable faster settlement, 24/7 trading, and improved liquidity in securities markets according to Bloomberg

.

The SEC's no-action letter provides DTCC with a three-year window to offer its tokenization services on pre-approved blockchains according to Bloomberg. DTCC's global head of strategy and market solutions, Michael Winnike, emphasized that the tokens represent the same legal entitlements as traditional holdings according to Bloomberg. The Depository Trust Co., a key subsidiary of DTCC, holds custody over many of the most liquid assets in U.S. markets according to Bloomberg.

The initiative reflects broader regulatory and market momentum toward blockchain-based financial infrastructure. Commissioner Hester Peirce praised the pilot as a "significant incremental step in moving markets onchain," highlighting the importance of investor choice at an early stage of development. Meanwhile, the SEC has warned that different tokenization models may raise distinct regulatory concerns, reinforcing its iterative approach to cryptocurrency oversight.

Why This Matters for Market Infrastructure

DTCC serves as a central clearing and settlement hub for equities and fixed-income products in the U.S. financial system according to Bloomberg. By extending its record-keeping functions to the blockchain, DTCC is positioning itself to support a hybrid market model. Michael Winnike noted that the tokenization service will operate on blockchains that meet DTC's technology standards according to Investing.com. DTC participants with registered wallets will be able to transfer tokenized entitlements directly to other registered wallets according to Investing.com.

The pilot program will enable DTC to track and record tokenized entitlements for its official books and records according to Investing.com. This functionality supports the integration of blockchain into existing financial systems without overhauling core infrastructure. The company expects the tokenization service to enhance market efficiency while maintaining legal and regulatory compliance according to Bloomberg.

Risks and Regulatory Considerations

While the SEC's authorization is limited to a specific set of securities, it opens the door for broader experimentation according to Bloomberg. However, Commissioner Peirce cautioned that tokenization models vary in complexity and risk. She emphasized the importance of regulatory clarity as market participants explore diverse approaches according to Investing.com. Some issuers have already begun tokenizing their own securities, potentially reducing reliance on traditional intermediaries according to Investing.com.

The SEC's approach is cautious but forward-looking. It has avoided imposing broad exemptions that could fragment liquidity or erode investor protections according to CryptoSlate. Instead, the agency is testing whether tokenized equities can operate within existing investor-rights and market-integrity frameworks according to CryptoSlate. Commissioner Paul Atkins has suggested a supervised innovation sandbox could be an option for 2026 according to CryptoSlate.

What This Means for Investors and Market Players

For investors, the tokenization of securities could mean faster transactions and lower costs according to Bloomberg. The ability to trade tokenized assets 24/7 may increase market participation, particularly in global or cross-border transactions according to Bloomberg. However, the pilot is subject to operational limitations, and the full impact will depend on how participants adopt the technology according to Bloomberg.

Traditional market players, including exchanges and clearinghouses, are also watching closely. Citadel Securities, for example, has urged the SEC to classify open-source developers involved in tokenized equity trading as unregistered brokers according to CryptoSlate. This position reflects concerns about regulatory arbitrage and the potential for unregistered platforms to undermine existing market integrity safeguards according to CryptoSlate.

Uniswap and other decentralized finance (DeFi) proponents have pushed back, arguing that treating open-source code like a centralized broker distorts the nature of blockchain technology according to CryptoSlate. The debate highlights a fundamental tension between the permissionless architecture of DeFi and the regulatory expectations of traditional finance.

As DTCC moves forward with its tokenization service, the broader market will be watching for signs of how the SEC balances innovation with investor protection. The outcome could shape the future of on-chain settlement in U.S. capital markets.