SEC backs DTC tokenisation of mainstream securities

The Depository Trust Company has secured regulatory clearance from the US Securities and Exchange Commission to launch a tokenisation service for a broad range of mainstream securities, in one of the most significant moves yet by a major market utility into digital assets.

The SEC has issued a No-Action Letter that permits DTC, a subsidiary of post-trade giant DTCC, to operate a controlled production environment for tokenised versions of assets that it already holds in custody. DTC plans to begin rolling out the service in the second half of 2026.

The authorisation runs for three years and applies to DTC Participants and their clients. The service will operate on pre-approved blockchains. The tokens will represent real-world assets and will carry the same entitlements, investor protections and ownership rights as the securities in traditional form.

DTCC said DTC will apply its existing standards for resiliency, safety and soundness to the digital asset service, in line with its role in conventional markets.

The scope of the approval covers a defined set of highly liquid assets. These include securities in the Russell 1000 index, which tracks the 1,000 largest publicly traded US companies by market value. It also includes exchange-traded funds that track major indices and US Treasury bills, notes and bonds.

The No-Action Letter allows DTC to move ahead under set limitations and representations without a separate rule change process. DTCC said this should shorten the time between finalising the service design and bringing it into live use.

Frank La Salla, President and Chief Executive of DTCC, said the decision marked a turning point for efforts to apply blockchain technology to core securities infrastructure.

"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."

DTCC said the authorisation sits at the centre of its wider strategy for a digital asset ecosystem that uses distributed ledger technology while retaining the transparency and legal structure of existing markets.

"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."

The new service will form part of DTCC's ComposerX suite of platforms. DTCC said this framework will give DTC Participants and their clients access to a full tokenisation workflow. The group aims to support a single liquidity pool that connects traditional finance venues with decentralised finance protocols.

DTCC said this model could support a more resilient and cost-efficient financial system and could broaden market access to tokenised instruments.

The company has invested in distributed ledger pilots and proofs of concept for almost a decade. It has worked with Participants, peer infrastructures and technology providers. These projects assessed how tokenisation and blockchain might deliver new features such as cross-border mobility, decentralised access and automation through smart contracts.

DTCC said these experiments focused on maintaining the same protections and accountability as DTC's existing custody and settlement services. The group now plans to apply those findings in a production setting under the SEC's conditions.

Under the No-Action Letter, DTC is authorised to operate the tokenisation service across both Layer 1 and Layer 2 blockchain providers. DTCC intends to disclose further details on on-boarding in the coming months. This will include wallet registration requirements and the process it will use to approve specific networks.

Nadine Chakar, Managing Director and Head of Digital Assets at DTCC, said the wider digital strategy rests on distributed ledger infrastructure.

"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."

DTCC said it will work with clients and other market participants as it prepares for launch and will release further information on timelines and asset coverage as it finalises the service.