SEC trading staff grants conditional no-action relief for DTC tokenization services pilot

What changed

Trading and Markets staff provided conditional no-action relief for DTC to develop and launch a limited voluntary tokenization service for eligible security entitlements held by DTC participants. The pilot is subject to asset, participant, blockchain, control, reporting, and time limits and does not broadly approve third-party tokenization models.

Who it affects

• DTC participants, broker-dealers, custodians, transfer agents, and issuers
• Advisers evaluating tokenized securities and settlement providers

What is still open

• Pilot adoption, eligible assets and chains, interoperability, finality, and legal treatment
• Whether the Commission will adopt durable rules available beyond DTC

What it means for an advisor

• Distinguish a DTC-recorded tokenized entitlement from direct issuer-record ownership or synthetic exposure
• Diligence rights, records, wallet controls, transfer restrictions, settlement, corporate actions, and recovery procedures

Previous interpretation

DTC did not have this staff relief for a live tokenized-entitlement service on supported blockchains.