A Century of Wall Street and a Decade of Blockchain: SEC approves stock tokenization pilot, trillions of dollars in assets welcome a "name correction" moment

The U.S. Securities and Exchange Commission (SEC) has officially approved a three-year pilot program through a “No-Action Letter,” allowing the Depository Trust & Clearing Corporation (DTCC) to initiate a pilot that enables the on-chain custody and settlement of traditional assets such as stocks and government bonds in tokenized form. This marks the first time that traditional financial assets valued in trillions of dollars have been opened up for tokenization via a regulated pre-approved blockchain network. Although the pilot has limitations, it is regarded as a “key step” in the migration of traditional financial markets toward blockchain technology, potentially bridging the gap between traditional finance and digital assets, and providing an unprecedented institutional liquidity foundation for the RWA (Real-World Assets) track.

SEC Breakthrough: No-Action Letter Paves the Way for Asset Tokenization

The core of the U.S. financial market infrastructure—the Depository Trust & Clearing Corporation—has received a historic license. The SEC issued a critical No-Action Letter permitting DTCC to provide tokenization services for traditional assets such as stocks and bonds on pre-approved blockchain networks over the next three years. The significance of this document lies in the SEC’s formal statement that it will not take enforcement action against DTCC’s specific activities within this pilot framework, removing major compliance uncertainties for traditional financial giants exploring blockchain technology.

A “No-Action Letter” is an official regulatory comfort granted based on a company’s submitted facts and plans. It does not constitute permanent legislative approval but provides a “safe harbor” for systemically important institutions like DTCC to cautiously explore new technologies. SEC Commissioner Hester Peirce pointed out in a statement that, although the plan is a pilot with operational restrictions, it signifies an important progressive step in the market’s on-chain transformation. This signal is positive for the entire traditional financial sector’s asset tokenization efforts.

The background for this move is the growing attention from global financial institutions to blockchain technology’s potential to improve settlement efficiency, reduce costs, and enable 7/24 around-the-clock market operations. DTCC’s pilot indicates that regulators are beginning to accept blockchain as a controlled and structured component of existing financial infrastructure rather than a disruptive force. This undoubtedly gives a boost to other cautious giants like Nasdaq.

Why DTCC? Interpreting the “Invisible Giant” of the Financial Market

To understand the significance of this approval, one must recognize DTCC’s central role in the financial system. Simply put, it is the “backstage manager” of U.S. and global financial markets. The vast majority of securities traded in the U.S.—including stocks and bonds—are ultimately recorded, owned, and transferred through DTCC and its subsidiary, the Depository Trust Company. Its managed assets amount to approximately 100 trillion USD, making it a “steadying star” in the global financial system.

Therefore, having DTCC lead this asset tokenization pilot lends unparalleled authority and systemic influence. Michael Winnike, Head of Clearing and Securities Services Global Strategy and Market Solutions at DTCC, emphasized that assets tokenized on the chain will have the “same legal rights and the same stock” as their traditional counterparts. This means that tokens representing Apple shares held by investors through this service will have equivalent legal rights as those held in traditional brokerage accounts.

This “legal equivalency” commitment is crucial. It addresses a long-standing core concern in asset tokenization: does a blockchain credential have a solid legal foundation? DTCC’s involvement essentially offers its own credit and central counterparty standing as a “credit endorsement” for on-chain tokenized assets. Winnike further pointed out that the new technology will incorporate controls similar to traditional markets, such as freezing or forcibly transferring assets if stolen, greatly enhancing institutional confidence.

What Assets Are Covered? Unveiling the Path to Hundreds of Billions in Entry

The pilot is not open to all assets; the SEC’s authorization explicitly limits it to a specific set of actively traded securities. According to Winnike, the initial asset pool will include the Russell 1000 Index components representing the 1000 largest U.S. companies, major index ETFs, and U.S. Treasury securities, bonds, and bills.

This selection reflects a cautious approach from regulators—starting with highly liquid, transparent, and relatively stable assets. Focusing on large-cap stocks and government bonds minimizes potential market stability risks and serves the broadest range of institutional investors. Winnike stated, “This allows us to create value for the market while starting with a pre-selected, high-liquidity securities pool.”

Key Information About the First Batch of Tokenized Assets in the Pilot

Scope: Russell 1000 Index components, major index ETFs, U.S. Treasuries (T-bills, bonds, notes)

Duration: 3 years

Legal Basis: SEC “No-Action Letter”

Custodian & Settlement Provider: DTCC

Target Launch Date: Second half of 2025

Long-term Vision: Incorporate assets totaling 100 trillion USD of custody assets into blockchain

This clear roadmap shows that the on-chain transformation of traditional financial giants will not happen overnight but will start from core, highly liquid asset categories. Gaining experience and regulatory trust will pave the way for gradual expansion. DTCC’s ultimate goal is to migrate its entire depository holdings—valued at 100 trillion USD—onto blockchain, which will require further regulatory exemptions from the SEC.

From T+2 to 7/24: How Tokenization Will Reshape Market Ecology

Proponents believe that asset tokenization will bring profound changes. The most immediate is the settlement cycle. Traditional markets operate on a T+2 delivery system, only during business days. Blockchain-based tokenization services, in theory, can achieve near-instant settlement and support 7/24 continuous asset transfer. Winnike noted, “This creates many new utilities, integrating two ecosystems.”

This around-the-clock operability not only meets global investors’ needs across different time zones but could also spawn new financial products and strategies. For example, collateralized lending based on tokenized government bonds, cross-chain DeFi protocols, etc., backed by high-quality, legally protected real-world assets. This provides an unprecedented “bridge asset” for the true integration of decentralized finance (DeFi) and traditional finance.

However, skeptics point out that although the technology is new, the core risks of finance—lending risk, counterparty risk, operational risk—have not changed. Making such transactions mainstream will still require acceptance from more mainstream institutional investors and global regulators. The success of the DTCC pilot hinges on its ability to improve efficiency while demonstrating that its on-chain system is as secure, compliant, and resilient as, or superior to, traditional systems.

Not Just a Tech Upgrade: The Beginning of a “Paradigm Shift” in Traditional Finance

This SEC approval carries as much symbolic as substantive significance. It marks the formal recognition by one of the world’s most important financial regulators of blockchain technology’s potential as a component of financial infrastructure. For the entire crypto industry and the RWA track, it’s a strong legitimacy signal. It indicates that compliant, real-economy-serving blockchain applications are gaining acceptance within mainstream systems.

For the crypto-native sector, this event suggests that the next major growth narrative may come from deep integration with the traditional world rather than complete disruption or isolation. Projects with clear regulatory pathways, capable of solving real efficiency issues, and able to align with existing legal frameworks will attract more attention. At the same time, it will intensify competition and collaboration between traditional financial institutions and crypto-native enterprises in talent, technology, and business models.

Looking ahead, with the DTCC pilot launching in the second half of 2025 and subsequent follow-ups by Nasdaq and others, a regulated, institution-led era of asset tokenization is quietly beginning. This is no longer just a “self-entertainment” for the crypto sphere but a proactive evolution of Wall Street facing technological change. Despite remaining challenges, the giant ship has already turned, and a profound financial paradigm shift may have just begun.