SEC Greenlights DTCC’s Blockchain Plans in First-Ever Market Infrastructure Pilot

The U.S. Securities and Exchange Commission has granted the most consequential blockchain approval in traditional finance to date, authorizing the Depository Trust Company (DTC)—the clearinghouse that processes virtually all U.S. equity trades—to run a multi-year pilot that records certain securities directly on select blockchains.

Outlined in a No-Action Letter issued Thursday, the SEC said it will not pursue enforcement if the DTC mints and burns blockchain-based tokens linked to securities already held in its custody. The move effectively opens the door for a blockchain-backed recordkeeping system at the core of America’s financial infrastructure for the first time.

The three-year pilot, expected to launch in the second half of next year, permits the clearinghouse to create and retire “tokenized entitlements” that mirror traditional book-entry positions. Several compliance obligations are temporarily waived, including procedural 19b-4 filings and strict clearing-agency rules that typically govern the reliability and security of mission-critical market systems.

DTCC called the program a bridge between TradFi and DeFi, saying blockchain rails could support a more resilient, efficient, and globally interoperable financial ecosystem. Participating firms will be able to convert traditional entitlements into blockchain tokens at will. When a participant opts into tokenization, the DTC debits those securities from its central ledger, moves them to a new digital omnibus account, and mints corresponding tokens into the participant’s registered wallet.

As part of the regulatory relief, DTCC must file detailed quarterly reports tracking pilot participation, the value of tokenized entitlements, approved or rejected blockchains, outages, the number of registered wallets, and any instances where the firm used its reversal authority. Eligible assets include Russell 1000 constituents, U.S. Treasurys, and major index ETFs.

The tokens can circulate on approved public or private blockchains, provided each network meets DTCC’s technology and security standards. While the underlying ledgers may be public, the program remains permissioned: token transfers are allowed only between DTCC-registered wallets, and the clearinghouse holds a “root wallet” giving it the ability to unwind erroneous or illicit transactions when needed.

DTCC said it will release the list of supported networks at a later date, emphasizing that the SEC’s relief governs its custody and control framework rather than mandating any specific blockchain architecture.

The initiative aims to reduce reconciliation burdens, streamline entitlement transfers outside standard settlement hours, and test how blockchain can enhance the resilience of the U.S. securities system—all without disrupting the safeguards that underpin market operations.

DTCC did not immediately respond to inquiries regarding which blockchains are under consideration for the pilot.