DTCC Authorized to Offer Tokenization Service

In a major milestone to drive digital asset adoption, The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, announced that its subsidiary, The Depository Trust Company (DTC), has received a No-Action Letter (NAL) from the U.S. Securities and Exchange Commission (SEC) to offer, under federal securities laws and regulations, a new service to tokenize real-world, DTC-custodied assets in a controlled production environment. DTC anticipates beginning to roll out the service in the second half of 2026.

The No-Action Letter authorizes DTC to offer a tokenization service for DTC Participants and their clients on pre-approved blockchains for three years. Under the NAL, DTC will have the ability to tokenize real-world assets, with the digital version having all the same entitlements, investor protections and ownership rights as the asset in its traditional form. In addition, DTC will provide the same high level of resiliency, safety and soundness as that of traditional markets.

The authorization applies to a defined set of highly liquid assets, including the Russell 1000, which represents the 1,000 largest publicly traded U.S. companies by market cap, as well as ETFs tracking major indices and U.S. Treasury bills, bonds and notes. The No-Action Letter is significant because it allows DTC to launch the service once finalized, under certain limitations and representations, more quickly than would have otherwise been possible.

"I want to thank the SEC for its trust in us. Tokenizing the U.S. securities market has the potential to yield transformational benefits such as collateral mobility, new trading modalities, 24/7 access and programmable assets, but this will only be achievable if market infrastructure provides a robust foundation to usher in this new digital era," stated Frank La Salla, President & CEO, DTCC. "We welcome this opportunity to further enable and innovate for the industry, our participants and their clients. We look forward to partnering across the industry to tokenize real-world assets safely and securely while advancing the future of finance for generations to come."

The SEC's No-Action Letter is a critical enabler of the firm's broader strategy to advance a secure, transparent and interoperable digital asset ecosystem that leverages the full potential of blockchain technology.

"From the start, DTCC has been pioneering breakthrough technologies that redefine markets and safeguard their integrity. Our tokenization initiative will build upon that legacy and enable us to work collaboratively with industry participants to usher in the era of digital markets," stated Brian Steele, Managing Director, President of Clearing & Securities Services at DTCC. "In partnership with our clients and the broader market, we will tokenize securities with uncompromising security, sound legal footing and seamless interoperability, all backed by the resilience that has anchored traditional markets for decades."

In support of this strategy, DTCC's tokenization approach will enable DTC Participants and their clients to take advantage of a comprehensive tokenization service, underpinned by DTCC's ComposerX suite of platforms. This will enable DTC to create a single pool of liquidity across the TradFi and DeFi ecosystems and deliver a more resilient, inclusive, cost-effective and efficient financial system.

"Distributed Ledger Technology (DLT) has the power to reshape markets, and DTCC is championing this transformation through innovative actions and bold solutions," said Nadine Chakar, Managing Director and Head of Digital Assets at DTCC. "Our suite of DLT offerings will underpin DTCC's tokenization service and, together with the industry, will drive development of a new digital asset ecosystem for all."

DTC has, in coordination with Participants, peers, and technology providers, explored and facilitated the use of DLT for almost a decade to determine how it could be utilized to allow market participants to leverage the benefits of blockchain and tokenization technology, including mobility (the ability to transfer an asset across jurisdictions and time zones without regard to standard trading hours or holidays), decentralization (the ability for market participants to access their assets more directly), and programmability (the ability to use smart contracts to optimize transfers or allocations of assets), all with the same protections and accountability that DTC provides.

Under the No-Action Letter, DTC is authorized to offer a limited production environment tokenization service across L1 and L2 providers. DTCC will provide more details about on-boarding requirements, including registering wallets, as well as the approval process for L1 and L2 networks in the coming months.

A full copy of the SEC's No-Action Letter is available at https://www.sec.gov/files/tm/no-action/dtc-nal-121125.pdf.

Source: DTCC

Nasdaq said in an email: "At Nasdaq, we believe that tokenization offers benefits to issuers and investors, by potentially enhancing the accessibility and mobility of these securities. We look forward to continuing our close collaboration with DTC, among other industry partners, to unlock these benefits, advance our markets, and uphold market integrity and investor protection – both of which are fundamental to the success of the U.S. equity markets."

Source: Nasdaq

Tokenization Trending: Statement on the Division of Trading and Market's No-Action Letter Related to DTC's Development of Securities Tokenization Services

Commissioner Hester M. Peirce

The staff of the Division of Trading and Markets issued a no-action letter to The Depository Trust Company ("DTC"). The letter relates to DTC's development and launch of a preliminary version of its voluntary securities tokenization program on supported blockchains that meet DTC's technology standards. This program will enable the tokenization of security entitlements to certain eligible securities that DTC's participants hold through DTC ("tokenized entitlements"). Any DTC participant with a registered wallet will be able to transfer its tokenized entitlement directly to the registered wallet of another DTC participant. DTC's software system will track each transfer to record tokenization entitlements for DTC's official books and records.

Although this program is a pilot subject to various operational limitations, it marks a significant incremental step in moving markets onchain. DTC plays a central role in our securities markets. I am looking forward to seeing how DTC's participants benefit from this program and the extent to which DTC's tokenization model can enhance the functioning of our securities markets.

DTC's tokenized entitlement model is a promising step along the tokenization journey, but other market participants are exploring alternate experimental avenues. As I have said repeatedly, the Commission's crypto work is iterative. We welcome and expect other market participants' continuing efforts to innovate and experiment. Their experiments may involve other securities tokenization models. Investor choice is critical, particularly at this early stage when the market is testing what works. For example, some issuers have begun tokenizing their own securities, which may make it easier for investors to hold and transact in securities directly, rather than through an intermediary. As I previously cautioned, market participants should be aware that different tokenization structures may raise distinct regulatory considerations.[1]

I want to thank Director Jamie Selway and his staff in the Division of Trading and Markets for their diligent work on issuing this important no-action letter.

Source: SEC