The US Securities and Exchange Commission (SEC) has issued a no-action letter to the Depository Trust Company (DTC), a subsidiary of the DTCC. This grants the central securities depository of the United States permission to offer a tokenization program for equities, ETFs, and US government bonds in a production environment.
The DTC currently safeguards securities with a total value exceeding USD 100 trillion and processes annual transactions worth USD 3.7 quadrillion. The approval applies for a period of three years and permits the tokenization of highly liquid asset classes on pre-approved Layer-1 and Layer-2 blockchains. The launch of the service is scheduled for the second half of 2026. The tokenized securities retain all rights, claims, and investor protection measures of their traditional form.
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Regulatory exemptions for a three-year pilot phase
The SEC’s no-action letter grants the DTC temporary exemptions from several compliance requirements, including key provisions of Rule 17Ad-22 governing the reliability and security of market infrastructures. Certain 19b-4 filings and specific standards for clearing organizations are also waived for the duration of the pilot phase. These exemptions allow the DTC to mint and burn tokenized securities on approved blockchains without violating existing clearing or system regulations.
In return, the DTCC commits to providing detailed quarterly reports covering usage data, technology decisions, and any transaction reversals. The no-action letter means that the SEC will not take enforcement action as long as the program is implemented as proposed. The three-year time limit aligns with standard practice for pilot programs and allows the regulator to reassess the framework once the testing phase concludes.
Highly liquid asset classes as the starting point for tokenization
The approval initially covers a defined basket of highly liquid instruments. This includes all components of the Russell 1000 Index, which represents the 1,000 largest US companies by market capitalization. Exchange traded funds (ETFs) that track indices are also included, as well as US government bonds in the form of Treasury bills, notes, and bonds. This asset selection minimizes liquidity risk and enables meaningful testing of the new infrastructure.
Tokenization will be carried out on Layer-1 and Layer-2 blockchain networks, the specific selection of which the DTCC will announce in the coming months. The organization has stated that it will publish details on onboarding requirements and the approval process for blockchain networks, as well as on wallet registration. Previous DTCC pilot projects, including the Smart-NAV initiative, already used Chainlink’s Cross-Chain Interoperability Protocol (CCIP), indicating potential future partnerships.
DTCC as the backbone of the US financial system
The Depository Trust & Clearing Corporation serves as the central clearing and settlement organization for the US securities market. The holding company was founded in 1999 and brings together key market infrastructures, including the Depository Trust Company (DTC), which has been operating since 1973. The DTCC processes nearly all exchange-listed securities transactions in the United States and is considered a systemically important financial market infrastructure. In June 2025, its subsidiary DTC surpassed the USD 100 trillion mark in assets under custody for the first time - a historic milestone.
Between 2020 and 2025, the DTC recorded substantial growth across all asset classes. The value of equities held in custody increased from USD 49.6 trillion to USD 74.1 trillion, representing growth of 49 percent. Exchange traded funds doubled in volume from USD 5.5 trillion to USD 11 trillion. Money market instruments rose by 28 percent to USD 4.1 trillion. Overall, assets under custody grew from USD 73.5 trillion to USD 100.3 trillion - an increase of 37 percent.
"The tokenization of the US securities market has the potential to deliver transformative benefits such as collateral mobility, new trading modalities, around-the-clock access, and programmable assets. However, this can only be achieved if market infrastructure provides a robust foundation for entering this new digital era." - Frank La Salla, CEO of DTCC
The tokenization initiative is part of a longer-term development. As early as April 2025, the DTCC launched a blockchain-based platform for tokenized collateral management to improve efficiency and enable real-time settlement. The current SEC approval goes significantly further, however, and for the first time allows large-scale tokenization of traditional securities under the direct oversight of the securities regulator.
Industry sees potential for structural transformation
The approval represents a rare case in which a major US financial institution has received the SEC’s green light for the use of blockchain technology. Previous tokenization projects in the financial sector were largely confined to private blockchains or conducted outside the United States. The SEC’s approval for the DTCC could therefore be interpreted as a signal of a paradigm shift in regulatory stance, particularly against the backdrop of the ongoing debate around digital assets.
For the blockchain industry, this development opens up new perspectives. Integrating traditional securities with a total value exceeding USD 100 trillion into blockchain infrastructures would significantly increase liquidity in decentralized financial markets. Programmable securities enable automated compliance checks, intelligent collateral management, and new trading models. Around-the-clock access to tokenized US government bonds could deliver efficiency gains, particularly for international investors.
The DTCC’s quarterly reports to the SEC will also provide insights into the practical implementation of blockchain technology in a regulated financial market. The choice of approved Layer-1 and Layer-2 networks is likely to be indicative for future tokenization projects. The DTCC has announced that it will publish the list of supported networks as well as technical requirements for wallet registrations in the coming months.
Outlook for broader market adoption
The three-year pilot phase is primarily intended to test technical and operational processes. Upon its conclusion, the SEC will decide, based on the data collected, whether and in what form a permanent approval will be granted. Limiting the scope to highly liquid instruments reduces systemic risk and allows for a gradual expansion to additional asset classes.
For traditional financial institutions, the DTCC initiative could serve as a blueprint. Numerous banks and asset managers have been observing tokenization projects but have so far hesitated due to regulatory uncertainty. The SEC’s no-action letter establishes a clear legal framework for the tokenization of securities in the United States for the first time. This is likely to encourage other market participants to launch their own blockchain initiatives or to cooperate with the DTCC.
