The SEC’s Division of Trading and Markets (the “Division”) issued a no-action letter to the Depository Trust Company (“DTC”), a wholly-owned subsidiary of the Depository Trust & Clearing Corporation, on December 11, 2025 concerning DTC’s development and launch of the pilot version of its voluntary securities tokenization program, referred to in the letter as the “DTCC Tokenization Services” (the “Program”).[1]
SEC Clears the Way for DTC’s Tokenization Pilot
DTC sought confirmation that the Division would not recommend that the SEC take enforcement action against DTC for violations of certain provisions of, and rules promulgated under, the Securities Exchange Act of 1934[2] in connection with DTC’s development and launch of a pilot version of a securities tokenization program. DTC argued that the Exchange Act provisions were “designed for organizations and centralized systems that perform functions of critical importance to the U.S. securities markets” and are “not applicable to, and ultimately incompatible with and unnecessary for a time-limited, voluntary service involving novel and decentralized systems.”[3]
The Division agreed and stated that, based on the facts and circumstances described in DTC’s request, it would not recommend enforcement action against DTC under identified Exchange Act provisions in connection with DTC’s operation of the Program. (DTC No-Action Letter, supra) Notably, the Division’s no-action position is non-binding and time-limited (expiring three years from the date DTC launches the Program) and DTC must provide written notice to the Division at launch. (id.)
Under the Program, DTC participants (each, a “Participant”) may elect to have their security entitlements to certain DTC-held securities recorded using blockchain technology, rather than exclusively on DTC’s centralized ledger. (id.) In operation, a Participant submits a “Tokenization Instruction,” DTC debits the relevant securities from that Participant’s DTC account and credits them to a “Digital Omnibus Account” on DTC’s centralized ledger, which reflects the sum of all tokenized entitlements. (id.) DTC then mints and delivers a token to the Participant’s registered wallet representing that Participant’s security entitlement (the “Token”). (id.) These Tokens do not create new securities or alter ownership structures; they serve as an additional record-keeping and tracking layer while the securities remain in DTC’s custody. The tokenization of these entitlements simply represents an innovative process for record-keeping and transfer capabilities that operates within DTC’s existing regulatory framework.
A Participant with a Token can transfer its tokenized entitlement directly to the registered wallet of another Participant and “would not be required to instruct DTC to effectuate such transfer.” (id.; see also H. Peirce, Commissioner, SEC, Statement on the Div. of Trading and Mkts., No-Action Letter Related to DTC’s Development of Securities Tokenization Services (Dec. 11, 2025)). To participate, a Participant must register one or more blockchain addresses on a DTC-approved blockchain. (DTC No-Action Letter, supra). DTC also describes compliance gating around the wallet layer, including DTC screening of registered wallets for OFAC compliance. (id.)
A Controlled Pilot
The Program is explicitly a limited pilot with built-in constraints, including restrictions on eligible securities types, transaction volumes, participating institutions, and supported blockchain networks. These guardrails allow DTC and regulators to observe how the system performs under controlled conditions before considering broader deployment. The Division’s response allows DTC to proceed with a controlled launch without first going through certain filing pathways that might otherwise have been required by the relevant provisions of the Exchange Act.
An Incremental Step Toward On-Chain Markets
SEC Commissioner Hester Peirce’s accompanying statement to the letter highlights the Program as “a significant incremental step in moving markets on-chain,” while emphasizing that the market is still early and “other market participants are exploring alternate experimental avenues.” (Peirce, Statement on Tokenization, supra). She additionally noted the competitive dynamic of DTC’s centralized tokenization infrastructure against direct issuer tokenization, as some issuers have already begun directly tokenizing their own securities. (id.) Direct issuer tokenization would enable investors to hold securities without intermediaries, reducing costs and increasing efficiency in U.S. financial markets. However, different approaches may ultimately serve different market segments, with infrastructure-based models like DTC’s serving public markets while direct tokenization might better suit private markets. This competition will likely accelerate innovation across the securities tokenization space, with each model striving to deliver greater efficiency, lower costs, and improved user experience.
The issuance of a no-action is an important indicator of the evolution of the SEC’s regulatory strategy in the digital assets space. Rather than pursuing rulemaking or formal guidance or requiring DTC to file a proposed rule change, the Division chose a flexible approach that allows for experimentation and innovation without creating binding precedent. This provides room for course corrections to the Program as practical experience advances, while still allowing DTC to proceed. This iterative approach, as Commissioner Peirce describes it, allows the market to learn by doing rather than waiting for perfect rules. (id.)
Looking Ahead
Looking ahead, DTC’s Program could trigger broader market transformation. Success here might accelerate tokenization initiatives by other depositories, custodians, and trading venues, potentially leading to comprehensive blockchain integration across U.S. capital markets. Although the Program launches with limitations, it will still establish a framework for controlled experimentation that could fundamentally reshape the financial markets. This validates the strategic importance of bridging traditional securities law concepts with blockchain technology, with the launch of DTC’s Program signaling a shift in the evolution of U.S. securities markets.
[1] SEC Div. of Trading and Mkts., No-Action Letter Request Related to The Depository Trust Company’s Development of the DTCC Tokenization Services (Dec. 11, 2025).
[2] The specific provisions include Section 19(b) of the Exchange Act and Rule 19b-4 thereunder, Exchange Act Rules 17ad-22(e) and 17ad-25(i) and (j), and Regulation Systems Compliance and Integrity (“Reg SCI”).
[3] Letter from The Depository Trust Company (DTCC) to Division of Trading & Markets, U.S. Securities & Exchange Commission (Dec. 11, 2025
