The Securities and Exchange Commission (SEC) has provided The Depository Trust Company, the primary venue for US listed stock clearing and settlement, with a three year no action letter allowing it to tokenize stocks. The DTC is a subsidiary of the DTCC. The SEC’s approval came after the DTC’s real world asset (RWA) tokenization plans were highlighted in Nasdaq’s application for its own no action letter, which relies on the DTC’s post trade infrastructure. While Nasdaq’s application indicated the DTC was aiming to be ready in Q3 2026, the DTC has since announced a broader launch timeframe of H2 2026.
Through various statements, the SEC has indicated that it intends to allow tokenization through multiple avenues and will leave it to the market to decide which path to use. Many so-called stock tokenization offerings do not provide ownership of the stock, resulting in fewer protections. By contrast, the DTC’s design means the rights of the owner of a stock token are the same as the conventional stock. An alternative path to enable full ownership is where a transfer agent performs the tokenization.
Under the DTC’s approach, the initial set of tokenized stocks will be the 1,000 largest included in the Russell 1000 index, as well as US Treasury securities and ETFs tracking major indices. Tokenization will take place when a DTC member requests it, and will be available to all DTC members except for certain foreign participants. Initially the tokenization will take place on selected blockchains, including permissioned and permissionless distributed ledgers, with the DTC aiming to expand the selection over time.
“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,” said Frank La Salla, President & CEO, DTCC.
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