The 3-day wait to settle your stock trades is about to die, thanks to a new SEC approval you missed
The Depository Trust Company, the U.S. monetary market infrastructure supplier that clears and settles securities trades, mentioned the SEC has given it casual approval to transfer forward with a tokenization service for some belongings it already holds in custody, with out dealing with enforcement motion.
The letter units situations for a time-limited rollout and ongoing reporting whereas protecting the underlying securities on DTC’s present custody rails.
It would enable DTC to provide DTCC Tokenization Services in a managed manufacturing surroundings below federal securities legal guidelines and rules. DTC anticipates a rollout within the second half of 2026.
SEC grants conditional inexperienced mild for DTC’s tokenization pilot
According to the SEC workers response dated Dec. 11, the workers wouldn’t suggest enforcement motion towards DTC in relation to its operation of a “Preliminary Base Version” of the service below Regulation Systems Compliance and Integrity (Reg SCI), Exchange Act Section 19(b) and Rule 19b-4, and Exchange Act Rules 17Ad-22(e) and 17Ad-25(i) and (j).
The workers mentioned the place is based mostly on the info offered, doesn’t state authorized conclusions, and could be modified or revoked.
The construction described in DTC’s request letter and the workers response treats tokenization as an alternate means to document a participant’s “safety entitlement,” quite than a change to the registered proprietor, nominee framework, or the authorized foundation that governs not directly held securities.
The securities would stay registered within the title of Cede & Co., whereas a DTC participant that opts in might instruct DTC to characterize its entitlement utilizing a token held in a registered blockchain pockets.
Under the operational stream described, DTC would debit the participant’s eligible book-entry entitlement from its DTC account, credit score the securities to a “Digital Omnibus Account” on DTC’s centralized ledger that displays the mixture of tokenized entitlements, then mint and ship a token to the participant’s registered pockets.
Token transfers can be restricted to registered wallets, and DTC would retain visibility into token actions.
The supplies describe an off-chain monitoring system, LedgerScan, that may scan underlying blockchains and create the document DTC would deal with as its official books and information for tokenized entitlements, whereas a separate system known as Factory would assist minting and supply.
A participant holding tokens might switch them immediately to the registered pockets of one other taking part agency with out instructing DTC to course of the switch on its centralized ledger.
How DTC’s proposed tokenized securities mannequin would function in apply
The paperwork additionally describe a de-tokenization stream during which DTC would burn the token and return the entitlement to the participant’s normal DTC account.
| Parameter | How the Preliminary Base Version is framed within the SEC workers letter |
|---|---|
| Who can take part | DTC contributors on an opt-in foundation, with sure contributors excluded whereas tax withholding/reporting and Treasury International Capital reporting points are addressed (about 11% of contributors as of Oct. 31, 2025, in accordance to DTC’s request letter). |
| Eligible “Subject Securities” | Russell 1000 constituents at launch (and later additions), U.S. Treasury payments, bonds, and notes, and index ETFs reminiscent of these monitoring the S&P 500 and Nasdaq-100. |
| Where tokens can transfer | Only to registered wallets, with DTC screening registered wallets for OFAC compliance and requiring tokenization protocols that implement distribution management and transaction reversibility (ERC 3643 is cited for instance in DTC’s request letter). |
| Risk controls at DTC | Tokenized entitlements would haven’t any collateral worth and no settlement worth for Net Debit Cap or Collateral Monitor calculations, and delivery-versus-payment settlement would happen away from DTC. |
| Oversight package deal | Quarterly reporting to SEC workers on taking part companies, tokenized shares and worth, transfers, eligible securities, registered pockets counts, blockchains used or declined, outages, and any root-wallet interventions. |
| Timing and sundown | DTC described proof-of-concept work in fall 2025 utilizing artificial belongings, restricted stay pilots with choose contributors in early 2026, a broader rollout within the second half of 2026, and a workers place that is withdrawn with out additional motion three years after launch, with DTC offering written discover at launch. |
For readers who’ve seen DTCC referenced in recent ETF coverage, the place DTCC system entries are sometimes misinterpret as a regulatory inexperienced mild, the workers letter addresses a completely different query. Those earlier experiences have emphasised that DTCC is post-trade infrastructure and that operational listings should not the approvals gate.
Here, the regulator is addressing whether or not DTC can function a tokenization layer round belongings it already holds, below specified limits on scope, transferability, and danger use.
The paperwork define guardrails that slim the preliminary scope and supply SEC workers with telemetry. DTC said it will not assign tokenized entitlements collateral worth or settlement worth for key inside controls, which retains this system separate from DTC’s default administration and end-of-day settlement mechanics.
Eligibility is restricted to extremely liquid securities, and tokens can transfer solely between allowlisted wallets tied to contributors.
DTC additionally represented that it will publish goal expertise requirements, keep the power to deal with outlined reversal situations, and supply quarterly reporting that features the names of blockchains used, in addition to the blockchains it declines to approve and the rationale for these selections.
SEC indicators cautious path towards market digitization
DTCC positioned the no-action letter as a part of a longer arc towards digitized market infrastructure.
DTCC CEO Frank La Salla mentioned tokenization can allow collateral mobility, new buying and selling modalities, 24/7 entry, and programmable belongings, and he thanked the SEC for permitting the agency to proceed below specified limits.
DTC’s request letter describes the depository as a registered clearing company and a systemically essential monetary market utility, and it says DTC custodies greater than $100 trillion in securities and processes a whole lot of hundreds of thousands of transactions annually.
The workers response is conditioned on the info offered and expresses solely the workers place on enforcement motion, not authorized conclusions. It additionally says the place could be modified or revoked and doesn’t deal with different legal guidelines or self-regulatory group guidelines which will apply.
DTC’s request letter outlines potential work after the preliminary section, together with increasing eligible securities, permitting tokenized entitlements to carry collateral or settlement worth, and exploring company motion distribution choices that might embrace stablecoins or tokenized deposits.
Any enlargement can be topic to additional engagement with SEC workers earlier than transferring past the preliminary parameters.
The timing locations the letter alongside broader U.S. tokenization discussions which have referenced estimates round $68 trillion for tokenized markets, whereas this workers motion focuses on a constrained deployment and quarterly reporting. DTC mentioned it expects to start rolling out the service within the second half of 2026.
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