Securities Regulation Daily Wrap Up, BLOCKCHAIN—DTCC has SEC go-ahead for its tokenization pilot program, (Dec 12, 2025)

By Rebecca E. Hoffman, J.D.

Commissioner Peirce called the no-action letter a “significant incremental step in moving markets onchain.”

The SEC Division of Trading and Markets staff Dec. 11 granted the Depository Trust and Clearing Corporation (DTCC)’s request for no action against the launch of its subsidiary’s securities tokenization program. The no-action letter authorizes the Depository Trust Company to offer the tokenization of security entitlements for three years, a service that promises to provide “mobility, decentralization, and programmability” to its customers who opt to take advantage of the program.

“‘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,’” Brian Steele, who serves as DTCC’s managing director and president of clearing and securities services, said in a press release. “‘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,’” Frank La Salla, DTCC’s president and CEO, added, “‘but this will only be achievable if market infrastructure provides a robust foundation to usher in this new digital era.’”

Program parameters. The letter explained that this program would permit most DTC participants to tokenize their securities entitlements for securities that are eligible for the program, which are those in the Russell 1000 Index at the time the program launches, U.S. Treasury securities, and ETFs that track major indices. Participants who want to take advantage will have to set up an address, or “registered wallet” compatible with an approved blockchain. Once the participant’s securities are credited to the Digital Omnibus Account, on DTC’s centralized ledger, its software will deliver a token to the participant’s registered wallet.

Once a participant has a token in their wallet, they will “be able to transfer such security entitlement to the Subject Securities directly to the Registered Wallet of another DTC Participant and would not be required to instruct DTC to effectuate such transfer.” LedgerScan software will monitor token transfers and track the wallet addresses where tokens are held. “For purposes of recording Tokenization Entitlements, LedgerScan’s record would constitute DTC’s official books and records,” the Division explained.

The pilot—or “Preliminary Base Version”—of the program will not require that wallets be linked to specific blockchains, but there will be standards for blockchains and tokenization protocols. In addition, software systems involved in operating the program are required to satisfy certain stability and security criteria. DTC must provide a quarterly report to the division with data such as the degree to which securities were tokenized, the number of registered wallets, and the names of involved blockchains. DTC will also provide reports and disclosures to participants.

“DTC’s tokenized entitlement model is a promising step along the tokenization journey,” SEC Commissioner Hester Peirce said in a statement. “We welcome and expect other market participants’ continuing efforts to innovate and experiment, [but] market participants should be aware that different tokenization structures may raise distinct regulatory considerations.”

DTC’s request expressed concern that the SEC would attempt to enforce Exchange Act Sections 19(b), Rules 19b-4, 17ad-22(e), and 17ad-25(i) and (j), or Regulation Systems Compliance and Integrity (Reg SCI), without no-action assurance. According to DTC, the provisions should not be applied to “a time-limited, voluntary service involving novel and decentralized systems.” Attempting to apply them “would be practically infeasible and would ‘smother’ the ability of DTC to innovate and develop the program in a timely manner in response to market participant feedback, technological changes, and learned experience,” the request said.

RegulatoryActivity: AlternativeInvestmentFunds Blockchain ClearanceSettlement ExchangesMarketRegulation