DTCC has received approval from the SEC to begin tokenizing its securities recordkeeping infrastructure. This means that claims on securities will have digital counterparts on a permissioned blockchain network, while the underlying securities will remain immobilized and registered with Cede & Co.
What is DTCC and Why Is Its Tokenization Important?
DTCC is a key clearing and recordkeeping operator through which quadrillions of dollars in trading volume pass annually, with approximately $99 trillion in assets held in custody. Such scale makes its infrastructure foundational to securities markets and explains the interest in modernizing settlement and recordkeeping processes.
The SEC approval allows DTCC to implement digital counterparts of existing records and transfer some functions to a permissioned blockchain network without dismantling the current system. This upgrade focuses on internal market wiring and optimizing settlement and recordkeeping procedures.
How Will Tokenization of Share Claims Work?
Under this initiative, not the shares themselves but the claims on them are tokenized: a virtual twin of the existing record is created in the form of a token that represents the claim right, which remains reversible and legally enforceable. The underlying securities remain immobilized and continue to be registered with Cede & Co.
Essentially, the form of rights recordkeeping changes, not the issuer’s registry: transfers of rights between participants can occur digitally via the permissioned network, while access to assets remains through DTC participants and centralized control is maintained. For more on the legal and technical context of tokenization via DTC, see the article on tokenization through DTC.
Benefits of Tokenization for the Securities Market
Tokenizing rights enables updating the existing infrastructure without dismantling it, preserving intermediaries and legal reversibility of claims. Digitizing some recordkeeping operations reduces the need for manual reconciliation, thereby lowering operational costs.
Additionally, digital rights can accelerate processes related to using securities as collateral and complex multilateral settlements, which is especially important for participants actively involved in lending, collateral, and ETFs.
Limitations and Features of the New Model
The boundaries of the new model are strict: token holders do not become direct shareholders of issuers, and tokens do not alter the issuer’s registry or allow free use in DeFi. DTCC positions this model as a digital analogue of existing rights, not a replacement of ownership form.
Access to tokenized rights will still be through DTC participants, and centralized control mechanisms remain, so the model does not eliminate existing intermediaries or legal procedures.
Impact of Tokenization on Retail and Institutional Investors
For retail investors, changes will be nearly unnoticeable since the primary user experience is shaped by brokers and services that already offer fractional shares, instant buying power, and extended-hours trading. These features will continue regardless of the form of rights recordkeeping.
Institutional participants will gain the most: digital rights will ease operations with collateral, lending, and complex settlements, potentially reducing costs and speeding up settlement processes. As a result, parallel tokenization models will emerge in the market, some updating the core of existing processes, others exploring more radical ownership approaches.
Why This Matters
Modernizing DTCC’s recordkeeping touches fundamental market operations holding trillions in assets, so changing the form of rights records can affect the speed and cost of securities settlement. Maintaining registration with Cede & Co and centralized mechanisms means the legal ownership structure stays the same.
For market participants, this means potential reductions in operational costs and faster collateral procedures, but not automatic changes in ownership rights or free movement of assets into DeFi exchanges. The new model is more a tool for recordkeeping optimization than a revolution in securities’ legal status.
What Should You Do?
If you are a miner with 1–1000 devices and do not hold securities directly, this change likely requires no action, as retail user experience remains broker-driven. However, it is useful to understand the basics: rights are tokenized, not the shares themselves, and access remains through DTC participants.
If you have securities investments via a broker or work with institutional services, it is advisable to check with your broker or custodian whether a transition to digital rights is planned and how it might affect collateral and settlement operations. For most retail operations, visible changes will be minimal.
- Check with your broker about any changes in reporting and rights access.
- If you use securities as collateral via institutional channels, discuss potential settlement accelerations with counterparties.
- Follow official clarifications from DTCC and regulators to understand rights reversibility and token use restrictions.
For related materials, read the article on how DTCC advances tokenization of treasury bonds, which explores examples of digital rights use in specialized market segments: tokenization of treasury bonds.
