The SEC approves DTCC's historic pilot to record U.S. securities on blockchain, starting in 2026.
DTCC will create and burn blockchain-based tokens to reflect security entitlements, with quarterly updates required.
The pilot will use registered blockchain wallets, ensuring security and control over tokenized securities.
The SEC has approved a three-year pilot program by the Depository Trust & Clearing Corporation (DTCC). This initiative will allow the clearinghouse to record specific U.S. securities on select blockchains. The pilot will begin in 2026, marking a historic step for blockchain technology in U.S. financial markets.
DTCC Gets SEC Approval for Blockchain Pilot Program
The SEC has granted approval for the DTCC to proceed with a pilot project. The program will focus on utilizing blockchain to record U.S. securities, with the DTCC creating and burning blockchain-based tokens. These tokens will reflect existing security entitlements held by the DTCC.
https://twitter.com/The_DTCC/status/1999237641766674796?s=20
The SEC clarified in a No-Action Letter that it will not take enforcement actions if the DTCC mints and burns these tokens. The program is scheduled to start in 2026 and will last for three years. The approval removes some usual regulatory requirements, including certain SEC regulations on market infrastructure security.
The DTCC aims to bridge traditional finance with decentralized finance (DeFi). In a statement, the company emphasized its commitment to enhancing the global financial system's resilience and efficiency through blockchain. However, the DTCC will need to submit quarterly updates on key aspects of the pilot.
DTCC to Record U.S. Securities on Blockchain by 2026
The tokenization process begins when a participant requests it from the DTCC. The DTCC will move the securities to a digital omnibus account and issue a matching token in a registered blockchain wallet. The participant will control this wallet and manage its contents.
This new system could allow entitlement transfers to occur outside normal market hours. It also provides the potential for smoother reconciliation processes. However, all tokens must be transmitted between registered wallets to ensure security and control. Additionally, the DTCC has outlined plans to support both public and private blockchains. These networks will meet the DTCC's technology requirements.
While the company will release a list of supported networks in the future, it has not disclosed further details on specific blockchain designs. In the event of a mistake or wrongdoing, the DTCC can reverse transactions. It will use a "root wallet" to exercise this authority, ensuring the system's integrity. Despite the shift to blockchain, the system will operate in a permissioned manner, maintaining control over ledger access.