Written by: Spinach Spinach
On December 11, 2025, the U.S. Depository Trust Company (DTCC) received a "No-Action Letter" from the SEC, authorizing it to tokenize its custodied securities assets on the blockchain.
The news was met with jubilation in the industry, becoming the focus of attention—$99 trillion in custodied assets were about to be put on the blockchain, finally opening the floodgates for the tokenization of U.S. stocks.
However, a closer reading of the document reveals a crucial detail: DTCC tokenizes "security entitlements," not the stocks themselves.
This distinction might sound like a legal jargon exercise.
This distinction might sound like a legal jargon exercise.
Understanding this background clarifies the boundaries of DTCC's tokenization.
According to the SEC's disclaimer and DTCC's public statements, its tokenization service targets "securities interests held by participants at the DTC." Participants refer to clearinghouses and banks that directly connect with DTCC—currently, only a few hundred institutions in the United States possess this qualification.
Ordinary investors cannot directly use DTCC's tokenization services.
The tokenized "security equity tokens" will circulate on a DTCC-approved blockchain, but these tokens still represent contractual claims to the underlying assets, not direct ownership. The underlying shares remain registered under Cede & Co., which remains unchanged. This is an infrastructure upgrade, not an architectural restructuring. Its goal is to improve the efficiency of the existing system, not to replace it. DTCC explicitly listed several potential benefits in its application documents: First, collateral liquidity: In the traditional model, the movement of securities between different accounts requires waiting for a settlement cycle, and funds are locked. After tokenization, near real-time equity transfers can be achieved between participants, releasing frozen capital. Second, simplified reconciliation: In the current system, DTCC, clearinghouses, and retail brokers each maintain independent ledgers, requiring a large amount of reconciliation work every day. On-chain records can become a shared "single source of truth." Third, paving the way for future innovation: The DTCC mentions in its documents that it may allow equity tokens to have settlement value or distribute dividends in stablecoins in the future. However, these require additional regulatory approval. It is important to emphasize that the DTCC explicitly states that these tokens will not enter the DeFi ecosystem, will not bypass existing participants, and will not change the issuer's shareholder register. In other words, it does not intend to disrupt anyone, and this choice is reasonable. Multilateral netting is a core advantage of the current securities clearing system. The daily trading volume of trillions of dollars in the market, after netting by the NSCC, ultimately only requires the movement of a few hundred billion dollars to complete the settlement. This efficiency can only be achieved under a centralized architecture. As a systemically important financial infrastructure, the DTCC's primary responsibility is to maintain stability, not to pursue innovation.
While DTCC is cautiously upgrading, another path has begun to emerge.
On September 3, 2025, Galaxy Digital announced that it had become the first Nasdaq-listed company to tokenize its SEC-registered equity on a mainstream public blockchain. Through a partnership with Superstate, Galaxy's Class A common stock can now be held and transferred in token form on the Solana blockchain.
The key difference is that these tokens represent actual shares, not claims to shares. Superstate, as an SEC-registered transfer agent, updates the issuer's shareholder register in real time when tokens are transferred on-chain.
The token holder's name will appear directly on Galaxy's shareholder register—unlike Cede & Co., which is not on this chain.
This is true "direct holding." Investors acquire property rights, not contractual claims. In December 2025, Securitize announced the launch of its tokenized stock service with "fully on-chain compliant trading" in the first quarter of 2026. Unlike many "synthetic tokenized stocks" on the market that rely on derivative structures, SPV packaging, or offshore structures, Securitize emphasizes that its tokens will be "real, regulated stocks: issued on-chain and directly recorded on the issuer's shareholder register." Securitize's model goes a step further: it supports not only on-chain holding but also on-chain trading. During US stock market opening hours, the price is pegged to the National Best Price (NBBO); during market closures, the price is dynamically priced by Automated Market Makers (AMMs) based on on-chain supply and demand. This implies a theoretical 24/7 trading window. This path represents another vision: treating blockchain as a native layer of securities infrastructure, rather than an add-on to the existing system. Fourth, two paths, two futures. This is not a debate over technological routes, but a contest between two institutional logics. The DTCC path represents incremental improvement; it acknowledges the rationality of the current system—the efficiency of multilateral netting, the risk mitigation of central counterparties, and the maturity of the regulatory framework—simply using blockchain technology to make this machine operate faster and more transparent. The role of intermediaries won't disappear; it will simply change the way they record transactions. The direct holding path represents a structural change—it questions the necessity of the indirect holding system itself: since blockchain can provide immutable ownership records, why are nested intermediaries still needed? If investors can safeguard their assets themselves, why relinquish ownership to Cede & Co.? Both paths have their trade-offs. Direct holding brings autonomy: self-custody, peer-to-peer transfers, and composability with DeFi protocols. However, the cost is dispersed liquidity and loss of netting efficiency. If every transaction must be fully settled on-chain, without a central clearinghouse for netting, capital requirements will increase significantly. Furthermore, direct holding means investors bear more operational risk—risks such as lost private keys and stolen wallets, traditionally covered by intermediaries, are now transferred to individuals. Indirect holding retains system efficiency: the economies of scale of centralized clearing, a mature regulatory compliance framework, and operating models familiar to institutional investors. However, the cost is that investors can only exercise their rights through intermediaries. Shareholder proposals, voting, and direct communication with issuers—rights that theoretically belong to shareholders—require multiple layers of intermediaries in practice. It is worth noting that the SEC remains open to both paths. In a statement released on December 11 regarding the DTCC's disclaimer, Commissioner Hester Peirce clearly stated: "The DTC's tokenized equity model is a promising step in this journey, but other market participants are exploring different experimental paths... Some issuers have already begun tokenizing their own securities, which could make it easier for investors to hold and trade securities directly, rather than through intermediaries." The regulator's signal is clear: this is not an either-or choice, but rather letting the market decide which model is better suited to which needs.
Faced with this path game, how should existing financial intermediaries respond?
First, clearing brokers and custodians need to consider the following questions:
In the DTCC model, are you indispensable or replaceable? If tokenized rights can be directly transferred between participants, is there still a basis for the custody fees, transfer fees, and reconciliation fees originally collected by clearing brokers? Institutions that adopt DTCC tokenization services first may gain a differentiated competitive advantage, but in the long run, this service itself may be standardized and commoditized.
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