SEC Greenlights DTCC's Landmark Plan to Tokenize Stocks on Blockchain
The move allows the central securities depository to custody and settle stocks as digital assets, a pivotal step in modernizing U.S. capital markets infrastructure.
The U.S. Securities and Exchange Commission has given the Depository Trust & Clearing Corporation (DTCC) a green light to advance its plan for tokenizing equities on the blockchain, a landmark decision that could reshape the plumbing of U.S. financial markets.
In a significant move for the world's largest financial market, the SEC issued a no-action letter authorizing the DTCC to support the custody and settlement of tokenized securities. The DTCC, which functions as the central clearinghouse for U.S. stock and bond markets, processed over $3 quadrillion in securities transactions in 2023, making its adoption of digital asset technology a pivotal moment for the industry.
This approval enables the DTCC to launch a three-year pilot program that will initially focus on a select group of highly liquid assets. These include stocks within the Russell 1000 index, exchange-traded funds (ETFs) that track major indices, and a range of U.S. Treasury securities. The initiative, according to a company announcement, aims to demonstrate how distributed ledger technology (DLT) can integrate with traditional market structures while maintaining robust safety and soundness.
The development is a major regulatory validation for the concept of 'real-world asset' tokenization, which involves creating a digital representation of a physical or traditional financial asset on a blockchain. Proponents argue that this can introduce significant efficiencies, such as 24/7 trading, instantaneous 'atomic' settlement, and increased liquidity and collateral mobility across the financial system.
By moving assets on-chain, the DTCC aims to reduce settlement cycles and counterparty risk, which remain key challenges in the current market structure. The service, which is anticipated to go live in the latter half of 2026, represents a foundational layer for the future of digital finance. SEC Commissioner Hester M. Peirce acknowledged the move as a "significant incremental step in moving markets onchain" and stated she looks forward to seeing how market participants will benefit.
This initiative by the financial system's central nervous system is expected to catalyze broader adoption among other key players. Exchange operator Nasdaq has already filed a proposed rule change with the SEC to facilitate the trading of tokenized securities, a plan contingent on the DTCC's new infrastructure being in place.
While the shift represents a technological leap forward, the DTCC has emphasized a strategy of coexistence, aiming to bridge traditional finance with the emerging digital asset ecosystem. The pilot program allows the firm and its members—which include the largest banks and broker-dealers on Wall Street—to explore the benefits of DLT within a controlled environment without disrupting the stability of the existing, highly-regulated system.