DTCC Blockchain Pilot: SEC’s No-Action Letter Clears Path for Blockchains
The SEC approved a three-year pilot for the Depository Trust Company to explore blockchain-based recordkeeping. The program covers specific U.S. securities. Thus, the country’s fundamental trade-settlement infrastructure can now mirror the holdings on select blockchains for the first time. It will use tokenized entitlements.
The SEC released a No-Action Letter on Thursday outlining its stance. It acknowledged that the SEC will not enforce DTCC minting or retiring tokens representing security entitlements in its custody. With this guarantee, the pilot should launch in the second half of next year. The government temporarily relaxed clearance agency regulations for the trial. The changes covered operational resilience, 19b-4 submissions, and other basic infrastructure standards. This regulatory freedom allows DTCC to test blockchain-based procedures in a controlled setting.
DTCC Pilot Bridges Traditional Finance With Blockchain Technology
According to a DTCC statement posted on X, the program will link new blockchain technology with conventional banking. Regular book-entry positions can be converted into digital tokens by investors using the scheme. This gives the DTCC the opportunity to evaluate whether distributed ledgers can hasten securities transactions while preserving current security measures. Major ETFs, U.S. Treasurys, and Russell 1000 equities are among the particular assets that are the focus of the pilot. This allows the DTCC to assess the system’s performance in various markets using a representative sample.
DTCC Reveals How Its New Tokenization System Actually Works
DTCC first transfers the securities from its central ledger into a digital omnibus account when a participant chooses to tokenize their holdings. The participant’s blockchain wallet is then issued a matching token. This guarantees that, without generating new claims or altering investor rights, each token in the DTCC system represents an existing entitlement.
Furthermore, as long as the networks adhere to the technological and governance guidelines set forth by DTCC, the tokens may function on either public or private blockchains. Participants will be able to assess their alternatives prior to the start of the trial when an official list of supported networks is released. The system is tightly regulated, even though it makes use of blockchain technology. Only wallets registered with the DTCC are able to exchange tokens, ensuring that all activity takes place under supervision
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