SEC Grants Conditional Approval for DTC’s Tokenization Pilot, Accelerating Settlement Times

The Depository Trust Company (DTC) has received informal SEC approval to proceed with a tokenization service for assets held in custody, marking a pivotal shift in securities settlement. The green light allows DTC to launch DTCC Tokenization Services in a controlled environment by late 2026, effectively eliminating the traditional 3-day settlement wait.

SEC staff clarified in a December 11 response that no enforcement action WOULD be recommended against DTC for operating the tokenization pilot under key regulations including Reg SCI and Exchange Act rules. The approval treats tokenized records as alternative security entitlements rather than ownership changes, preserving existing custody infrastructure.

This regulatory milestone signals growing institutional adoption of blockchain technology, with tokenization poised to streamline post-trade processes across traditional markets. The phased rollout includes ongoing reporting requirements and could set precedents for broader asset digitization.