# President, Clearing & Securities Services

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3Ad170059514029ad9

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

December 11, 2025
Brian Steele
Managing Director,
President, Clearing & Securities Services
DTCC
570 Washington Boulevard
Jersey City, NJ 07310
Re:

Nadine Chakar
Managing Director,
Global Head of DTCC Digital Assets
DTCC
55 Thomson Place
Boston, MA 02210

No-Action Letter Request Related to The Depository Trust Company’s
Development of the DTCC Tokenization Services

Dear Mr. Steele and Ms. Chakar:
In your letter dated December 11, 2025 (the “Request”), 1 on behalf of The Depository
Trust Company (“DTC”), you request that the staff of the Division of Trading and Markets (the
“Staff”) not recommend that the Securities and Exchange Commission (the “Commission”) take
enforcement action against DTC under certain provisions of, and rules promulgated under, the
Securities Exchange Act of 1934 (“Exchange Act”), to launch the pilot version (the “Preliminary
Base Version”) of a securities tokenization program (the “DTCC 2 Tokenization Services”).
Specifically, DTC’s Request addresses: (i) Regulation Systems Compliance and Integrity (“Reg
SCI”); 3 (ii) Section 19(b) of the Exchange Act and Rule 19b-4 thereunder; 4 and (iii) Exchange
Act Rules 17Ad-22(e) (the “CCA Standards”) and 17Ad-25(i) and (j), 5 in relation to DTC’s
operation of the Preliminary Base Version of the DTCC Tokenization Services.

1

A copy of the Request is attached.

2

“DTCC” refers to the Depository Trust and Clearing Corporation, which is the parent company of DTC.
DTC is a wholly owned subsidiary of DTCC. DTCC operates on a shared service model with respect to
DTC and its other affiliated clearing agencies, National Securities Clearing Corporation (“NSCC”) and
Fixed Income Clearing Corporation (“FICC”). Most corporate functions are established and managed on an
enterprise-wide basis pursuant to intercompany agreements under which it is generally DTCC that provides
relevant services to DTC, NSCC and FICC.

3

17 C.F.R. 242.1000–1007.

4

15 U.S.C. 78s; 17 C.F.R. 240.19b-4.

5

17 C.F.R. 240.17ad-22(e); 17 C.F.R. 240.17ad-25(h), (j).

Based on the Request, we understand the facts and circumstances to be as follows: 6
•

DTC is a registered clearing agency under Section 17A of the Exchange Act, a New York
limited purpose trust company, and a state member bank of the Federal Reserve System. In
2012, DTC was designated as a systemically important financial market utility by the
Financial Stability Oversight Council. DTC is a wholly owned subsidiary of the Depository
Trust & Clearing Corporation (“DTCC”), a user-owned cooperative that provides custody,
clearing, and settlement services.

•

DTC states that the Preliminary Base Version is a pilot version of the DTCC Tokenization
Services, which would allow DTC Participants 7 to elect to have their security entitlements to
DTC-held securities recorded using distributed ledger technology (the “Tokenized
Entitlements”), rather than exclusively through DTC’s current centralized ledger. In doing so,
the program aims to give DTC Participants the ability to utilize the benefits of blockchain
and tokenization technology, including mobility, decentralization, and programmability.

•

Any DTC Participant would be permitted—at the DTC Participant’s election—to participate
in the Preliminary Base Version of the DTCC Tokenization Services with an exception (i.e.,
Participants for which DTC has U.S. tax withholding or reporting obligations, or a Treasury
International Capital reporting obligation). Any DTC Participant wishing to use the DTCC
Tokenization Services would need to register with DTC one or more addresses on an
approved blockchain (each, a “Registered Wallet”) for the purpose of holding tokens
corresponding to Tokenized Entitlements.

•

A DTC Participant with a Registered Wallet would be able to instruct DTC to tokenize the
DTC Participant’s security entitlement to certain eligible securities (“Subject Securities”)
currently credited to the DTC Participant’s Account (i.e., any Book-Entry Entitlements) (the
“Tokenization Instruction”). Upon acceptance of a Tokenization Instruction, DTC would
debit the Subject Securities from the DTC Participant’s Account and credit them to the
Digital Omnibus Account, an account on DTC’s centralized ledger that reflects the sum of all
Tokenized Entitlements held in all Registered Wallets. DTC would then use its Factory
system, which is a software system maintained by DTC, to mint and deliver to the DTC
Participant’s specific Registered Wallet a token representing the DTC Participant’s security
entitlement to the Subject Securities (the “Token”).

•

Any DTC Participant with a Token would be able to transfer such security entitlement to the
Subject Securities directly to the Registered Wallet of another DTC Participant and would
not be required to instruct DTC to effectuate such transfer.

6

A copy of your letter is attached with this response to avoid reciting the facts set forth therein.

7

The term “Participant” means a Person approved as a Participant by the [DTC] pursuant to Section 1 of
Rule 2. DTC Rule 1.

2

•

Additionally, any DTC Participant with a Tokenized Entitlement credited to a Registered
Wallet may instruct DTC to credit any securities represented by Tokenized Entitlements back
to its Account (i.e., a de-tokenization instruction, which converts the Tokenized Entitlement
back to a Book-Entry Entitlement in an Account). Upon acceptance of such instruction, DTC
would burn the Token in the DTC Participant’s Registered Wallet, debit such securities from
the Digital Omnibus Account, and credit those securities to the Participant’s Account.

•

Any transfer of Tokens from one Registered Wallet to another Registered Wallet would be
tracked by and visible to DTC. To perform this function, DTC would utilize LedgerScan, an
off-chain software system that resides in a public cloud, to track the movement of the
Tokens, including the Registered Wallets in which they are held, by scanning the underlying
blockchains. Based on this tracking, LedgerScan would make a record of the Tokenized
Entitlements according to the Tokens that are held in each Participant’s Registered Wallet(s).
LedgerScan is able to track and record Token movements and Registered Wallet holdings in
near real-time. For purposes of recording Tokenization Entitlements, LedgerScan’s record
would constitute DTC’s official books and records.

•

At all times, the registered ownership of any securities represented by a Tokenized
Entitlement would not change; those securities would remain registered in the name of Cede
& Co., DTC’s nominee.

•

In addition, to avoid any “double spend” of any securities represented by a Tokenized
Entitlement, those securities credited to the Digital Omnibus Account would not be
transferable from such account until a corresponding Token is burned. As a result, the DTC
Participant holding a Tokenized Entitlement to a Subject Security would not be able to
transfer its beneficial ownership of the security through instructions to DTC to make changes
to its centralized ledger. Rather, such Participant would need to effectuate transfers by
transferring the Token on the blockchain (or by instructing DTC to burn or convert the
Token).

•

The Preliminary Base Version of the DTCC Tokenized Services would not prescribe a
particular blockchain on which Registered Wallets must be maintained or a particular
tokenization protocol (i.e., suite of governing smart contracts) to which each Token must be
subject. DTC would, however, prescribe objective, neutral, and publicly available
requirements for both blockchains and tokenization protocols aimed at ensuring that the
Tokens are only transferrable to Registered Wallets, that DTC can take steps to address any
erroneous entries, lost tokens, or malfeasance (“Conditions Requiring Reversal”), and that
Tokens are maintained on blockchains that are reliable, resilient, secure, and subject to robust
consensus and governance mechanisms. DTC states that prescribed standards (“Technology
Standards”) would allow it to support the broadest range of investor choice and exploration,
without compromising the safeguarding of securities.

3

•

DTC plans to make available to Participants a list of public and private distributed ledgers on
which a Participant may register a blockchain address as a Registered Wallet.

•

The systems used to perform the key functions of the DTCC Tokenization Services, such as
LedgerScan, would be designated as “Tier 2” systems within DTCC’s internal rating
structure. Among other things, Tier 2 systems must have the ability to operate from both a
primary and a secondary location, a maximum of a four-hour recovery time objective, no
more than two minutes of data loss from an outage, and annual out-of-region disaster
recovery and resumption testing. Moreover, such new systems could only instruct DTC’s
existing centralized systems in two very limited ways: to deliver Subject Securities to or from
the Digital Omnibus Account or to make a cash payment from a corporate action event (e.g.,
a dividend payment). All other touch points between the new systems and DTC’s existing
centralized systems would be read only.
In particular, the Staff notes that DTC’s Request includes the following statements:
•

No Collateral or Settlement Value: DTC would not ascribe to any Tokenized
Entitlements any collateral value or settlement value for purposes of calculating a DTC
Participant’s Net Debit Cap or the Collateral Monitor (that is, it would not ascribe to any
Tokenized Entitlements any collateral value or settlement value for purposes of DTC risk
management).

•

Eligible Securities: limited to (i) securities in the Russell 1000 Index at the time the
Preliminary Base Version launches as well as any additions to the index thereafter and
notwithstanding the subsequent removal of any securities from the index, (ii) U.S.
Treasury securities (i.e., bills, bonds, and notes), and (iii) ETFs that track major indices,
such as the S&P 500 index and Nasdaq-100 index.

•

Systems Issues: if DTC identifies that a disruption, compliance issue, or intrusion of or
into any of the systems used in the DTCC Tokenization Services has occurred that
materially impacts, or is reasonably likely to materially impact, the operation of the
DTCC Tokenization Services (a “Systems Event”), DTC would (i) notify Division staff
as soon as reasonably practicable following a Systems Event, (ii) keep Division staff
informed as DTC works to resolve the Systems Event, and (iii) notify Division staff once
the Systems Event is resolved.
o To the extent that a Systems Event also has an impact beyond the DTCC
Tokenization Services, including on any critical or indirect SCI system used by
DTC to provide clearance and settlement services as a registered clearing agency,
DTC would comply with its Reg SCI obligations.
o DTC management would deliver any Systems Event information provided to
Division staff to its Board of Directors at the next regularly scheduled meeting.
o The systems used to perform the key functions of the DTCC Tokenization
Services, i.e., LedgerScan and Factory, would maintain a Tier 2 or better system
rating within DTCC’s internal rating structure, meaning that these systems have
the ability to operate from both a primary and a secondary location, a maximum
4

of a four-hour recovery time objective, no more than two minutes of data loss
from an outage, and annual out-of-region disaster recovery and resumption
testing.
o In addition, the systems used to perform the key functions of the DTCC
Tokenization Services, i.e., LedgerScan and Factory, would be physically and
logically separate from the SCI systems used by DTC to perform clearance and
settlement services as a registered clearing agency. The only two instructions such
new systems supporting the Preliminary Base Version of the DTCC Tokenization
Services could give DTC’s existing centralized systems are to (i) deliver Subject
Securities to or from the Digital Omnibus Account or (ii) make a cash payment
from a corporate action event, whereas all other touch points would be read only.
•

Reporting to Division Staff: for each calendar quarter, DTC would provide a quarterly
report package to Division staff containing:
o The identities of the DTC Participants currently participating in the Preliminary
Base Version as of the end of the quarter;
o The total number of shares and total value of security entitlements that have been
tokenized pursuant to a Tokenization Instruction during the quarter;
o The total number of shares and total value of security entitlements as of the end of
the quarter maintained as Tokenized Entitlements;
o The average daily volume of Tokenized Entitlements transferred between DTC
Participants during the quarter;
o The total number of security entitlements (count of CUSIPs) that have been detokenized during the quarter;
o The list of securities eligible to be Subject Securities as of the end of the quarter;

o The number of Registered Wallets at the end of the quarter;

o The names of the blockchains on which Tokens were recorded during the quarter;
o The names of any blockchains DTC has determined not to approve for inclusion
in the Preliminary Base Version during the quarter and the rationale for not
including any such blockchain;
o Any instances in which DTC used its “root wallet” to address Conditions
Requiring Reversal during the quarter;
o Information on any unavailability of the Preliminary Base Version of the DTCC
Tokenization Services and any tokenization protocols, including the length of
time of the outage;
o Information on the operations and systems of the Preliminary Base Version of the
DTCC Tokenization Services, as requested by the Staff; and
o Copies of any disclosures provided to DTC Participants in the DTCC
Tokenization Services.

5

o DTC management would provide the quarterly reporting to the Staff no later than
the third Friday following each quarter’s end date and would deliver the quarterly
reporting provided to the Staff to the DTCC Board of Directors at the next
regularly scheduled meeting.
•

Transparency:
o DTC would make publicly available: (i) the Technology Standards applicable to
the service (including blockchain and tokenization protocols); (ii) a list of
approved blockchains; and (iii) any fees or charges imposed by DTCC in
connection with the service.
o DTC would make information and data maintained in the system available to the
Staff.

•

Limited to Participants/Registered Wallets: Only DTC Participants would be permitted to
register wallets, and the relevant DTC Participant would be fully responsible for the
activity in the Registered Wallet(s). The tokens would only be transferable to Registered
Wallets.
o Participation is voluntary and can be begun or ended at any time upon notification
and instruction to DTC.

•

Reporting and Disclosure to Participants:
o DTC would provide its Participants that participate in the DTCC Tokenization
Services with a regular report of the securities credited to the DTC Participant’s
Account that may be subject to a Tokenization Instruction and the scope of
eligible securities.
o Participants would receive disclosures regarding the mechanics and operation of
the DTCC Tokenization Services and would receive reasonable advance notice in
writing of any material changes to the DTCC Tokenization Services.

•

Blockchain and Wallet Technology Requirements:
o DTC would only register a blockchain address as a Registered Wallet if (i) the
blockchain is a supported blockchain that satisfies the Technology Standards and
(ii) DTC has performed its own screenings of the wallet and confirmed that it
complies with the OFAC requirements.
o All tokens would be subject to tokenization protocols that satisfy DTCC’s
technology requirements, including to ensure that they support distribution control
and transaction reversibility.
o DTC would have the technological capability to transfer any of the tokens to
address Conditions Requiring Reversal.
Response:

Based on the facts and circumstance described in the Request, and without necessarily
concurring with your conclusions and analysis, the Staff would not recommend enforcement
action to the Commission against DTC under: (i) Reg SCI; (ii) Section 19(b) of the Exchange
6

Act and Rule 19b-4 thereunder; and (iii) Exchange Act Rules 17Ad-22(e) and 17Ad-25(i) and (j)
in relation to DTC’s operation of the DTCC Tokenization Services. This letter is withdrawn
without further action three years from the date DTC launches operation of the Preliminary Base
Version of the DTCC Tokenization Services. DTC will provide written notice to the staff at the
time of that launch.
The position of the Staff is based strictly on the facts and circumstances discussed in the
Request, and any different facts or circumstances might require a different response.
Furthermore, this response expresses the Staff’s position on enforcement action only and does
not purport to express any legal conclusions on the questions presented. The Staff expresses no
view with respect to any other questions that the proposed activities may raise, including the
applicability of any other federal or state laws, or self-regulatory organization rules. This
position is subject to modification or revocation by the Staff at any time.
If you have any questions regarding this letter, please call me at (202) 551-5712 or
Elizabeth Fitzgerald at (202) 551-6036.

Sincerely,

Jeffrey S. Mooney
Associate Director
Attachment

7

December 11, 2025
Jeffrey Mooney
Associate Director
Office of Clearance and Settlement
Division of Trading and Markets
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
RE:

No-Action Request Related to The Depository Trust Company’s
Development of the DTCC Tokenization Services

Dear Mr. Mooney:
The Depository Trust Company (“DTC”) respectfully requests that the staff of the
Division of Trading and Markets (the “Division”) of the Securities and Exchange Commission
(the “SEC” or the “Commission”) confirm that it would not recommend that the Commission
take enforcement action against DTC for violations of certain provisions of, and rules
promulgated under, the U.S. Securities Exchange Act of 1934, as amended (the “Exchange
Act”), in connection with DTC’s development and launch of a preliminary version (the
“Preliminary Base Version”) of a securities tokenization program (the “DTCC Tokenization
Services”). The DTCC Tokenization Services would allow DTC participants (each, a
“Participant”) to elect to have their security entitlements to DTC-held securities recorded using
distributed ledger technology (“DLT”), rather than exclusively through DTC’s current
centralized ledger. In doing so, the program aims to give Participants the ability to leverage the
benefits of blockchain and tokenization technology, including mobility, decentralization, and
programmability, without foregoing the protection and accountability that a central securities
depository (a “CSD”) and registered clearing agency provides.
More specifically, DTC requests the Division staff provide assurance that it would not
recommend that the Commission take enforcement action against DTC for violations of Section
19(b) of the Exchange Act and Rule 19b-4 thereunder,1 Exchange Act Rules 17ad-22(e) (the
“CCA Standards”) and 17ad-25(i) and (j), or Regulation Systems Compliance and Integrity
(“Reg SCI”2 and collectively, the “Subject Provisions”) in connection with DTC’s development

1
2

15 U.S.C. § 78s; 17 C.F.R. § 240.19b-4.
17 C.F.R. § 242.1000–1007.

1

Jeffrey Mooney
December 11, 2025
and launch of the Preliminary Base Version of the DTCC Tokenization Services, as described
below.3
The Subject Provisions were designed for organizations and centralized systems that
perform functions of critical importance to the U.S. securities markets. As a result, they are not
applicable to, and ultimately “incompatible with [and] unnecessary for” a time-limited, voluntary
service involving novel and decentralized systems.4 Attempting to apply the Subject Provisions
to such a program would be practically infeasible and would “smother” the ability of DTC to
innovate and develop the program in a timely manner in response to market participant feedback,
technological changes, and learned experience.5
Relief from the Subject Provisions is also appropriate, in the public interest, and
consistent with the safeguarding of securities and funds, open access, and the prompt and
accurate clearance and settlement of securities transactions because the Preliminary Base
Version of the DTCC Tokenization Services includes numerous design controls that would limit
the scope of the program and its capacity to affect DTC’s operations or the broader U.S.
securities market. DTC is proposing to tailor the relief requested herein based on the application
of these controls and on DTC’s adherence to a number of other commitments as described
herein, including periodic reporting to Division staff, use of allowlisted wallets, and restriction of
tokenization protocols to compliance-aware ones, such as ERC 3643.6 Collectively, these
controls and commitments would “achieve the core policy aims of the federal securities laws,”7
ensure that the Preliminary Base Version of the DTCC Tokenization Services does not interfere
with DTC’s support of the U.S. securities markets, and “address the[] risks and complexities”
that arise as DLT “becomes increasingly entangled with traditional finance.”8
The Preliminary Base Version of the DTCC Tokenization Services would allow DTC, its
Participants, and their customers to explore making their securities “smarter” in a controlled
environment that can provide the Commission with insights on how to “promote a transparent
regulatory environment”9 for the tokenization of real-world assets and “provid[e] legal clarity”
on the various issues tokenization raises “in a sensible manner.”10 Equipped with such legal
clarity, DTC would plan to develop the DTCC Tokenization Services into an arrangement that is

3

17 C.F.R. § 240.17ad-22(e), 17 C.F.R. § 240.17ad-25(i), (j).
See Paul S. Atkins, Keynote Address at the Crypto Task Force Roundtable on Tokenization (May 12,
2025), available at https://www.sec.gov/newsroom/speeches-statements/atkins-remarks-crypto-roundtabletokenization-051225-keynote-address-crypto-task-force-roundtable-tokenization (“While the Commission and its
staff work to develop a comprehensive regulatory framework for crypto assets, securities market participants should
not be compelled to go offshore to innovate with blockchain technology.”).
5
Paul S. Atkins, American Leadership in the Digital Finance Revolution (July 31, 2025), available at
https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125.
6
Paul S. Atkins, American Leadership in the Digital Finance Revolution (July 31, 2025), supra note 6.
7
Id.
8
Caroline A. Crenshaw, A Reckless Game of Regulatory Jenga – Remarks at “SEC Speaks” (May 19,
2025), available at https://www.sec.gov/newsroom/speeches-statements/crenshaw-remarks-sec-speaks-051925.
9
Mark T. Uyeda, Tokenization of Real-World Assets (May 12, 2025), available at
https://www.sec.gov/newsroom/speeches-statements/uyeda-remarks-crypto-roundtable-tokenization-051225.
10
Hester M. Peirce, Getting Smart – Tokenization and the Creation of Networks for Smart Assets: Opening
Remarks for Tokenization Roundtable (May 12, 2025), available at https://www.sec.gov/newsroom/speechesstatements/peirce-remarks-crypto-roundtable-tokenization-051225.
4

2

Jeffrey Mooney
December 11, 2025
substantially compliant with the Subject Provisions and the broader regulatory framework
applicable to registered clearing agencies.
Below we discuss the background of DTC and the DTCC Tokenization Services, as well
as the Subject Provisions.
I.

Background
a.

The Depository Trust Company

DTC is a wholly owned subsidiary of the Depository Trust & Clearing Corporation
(“DTCC”), a user-owned cooperative that provides custody, clearing, and settlement services to
the global financial industry. DTC plays a critical role in the safekeeping of securities and the
clearance and settlement of securities transactions. It facilitates the electronic recordkeeping and
transfer of securities, significantly reducing the need for transferring physical certificates and
manual processing. As of 2025, DTC custodies over $100 trillion in securities and processes
hundreds of millions of transactions annually.11
DTC is a registered clearing agency under Section 17A of the Exchange Act, a New York
limited purpose trust company, and a state member bank of the Federal Reserve System. DTC
also provides services as a CSD and, in 2012, was designated as a systemically important
financial market utility (“SIFMU”) by the Financial Stability Oversight Council (“FSOC”).
DTC’s primary services include providing custody for a wide range of physical
securities, facilitating the transfer and recordation of book-entry securities, and settling securities
transactions in coordination with DTC affiliates that are also registered as clearing agencies with
the Commission. DTC’s core services of custody of securities certificates and other instruments,
and settlement and asset services for eligible securities, are available to its Participants, who may
in turn provide custodial or other services to their customers. A Participant’s securities custodied
by DTC are typically registered in the name of Cede & Co., DTC’s nominee. DTC records each
Participant’s entitlement to the securities in an account (an “Account”) on its centralized ledger
system (a “Book-Entry Entitlement”). To the extent a Participant is holding securities on behalf
of a customer, the customer’s entitlement to such securities is recorded on the Participant’s
books and records.
b.

Article 8 of the UCC

Article 8 of the Uniform Commercial Code (the “UCC”) is the commercial law
framework that governs DTC’s custody of securities for Participants.12 Article 8’s provisions
ensure that intuitive rules, that are workable for a liquid securities market, govern the perfection
and priority of security interests and the rights of good faith acquirers relative to adverse

11

DTCC, DTCC Central Securities Depository Subsidiary Surpasses $100 Trillion in Assets Under Custody,
Marking Historic Milestone (Jun. 18, 2025), available at https://www.dtcc.com/news/2025/june/18/dtcc-centralsecurities-depository-subsidiary-surpasses-100-trillion-in-assets-under-custody.
12
See UCC § 8-501 cmt. 1 (noting that the relationship between a clearing corporation and its participants
clearly falls within the scope of Article 8’s rules related to indirectly held securities).

3

Jeffrey Mooney
December 11, 2025
claimants. They also ensure that securities held at DTC are reserved for Participants and would
not form part of DTC’s estate in an insolvency (i.e., they are “bankruptcy remote” from DTC).
Under Article 8, DTC is a “securities intermediary,”13 and each Participant’s rights to the
securities held for it are “security entitlements.”14 A Participant is an “entitlement holder” (i.e.,
the “person identified in the records of a securities intermediary as the person having a security
entitlement against the securities intermediary”).15 As mentioned above, DTC currently records
each Participant’s security entitlements via Book-Entry Entitlements (i.e., credits to the
Participant’s Account at DTC).
As a securities intermediary, DTC is subject to certain duties set forth in Part 5 to Article
8 of the UCC. These include the duties to hold sufficient securities to satisfy entitlement holders’
security entitlements thereto,16 to obtain payments or distributions on securities for entitlement
holders,17 to exercise rights as directed by the entitlement holder,18 to transfer or redeem the
securities as instructed by the entitlement holder,19 and to change the form of holdings of the
securities as directed by the entitlement holder.20 In addition, the UCC makes clear that securities
held by a securities intermediary for an entitlement holder do not form part of the securities
intermediary’s estate upon the securities intermediary’s insolvency, but instead are the property
of the entitlement holders.21
In tandem with Article 9 of the UCC, Article 8 also sets out perfection and take-free rules
that are designed to align with market participants’ expectations and to support a liquid securities
market. In particular, a secured party without notice of adverse claims takes free of adverse
claims if it has “control” of a security entitlement.22 In addition, under Articles 8 and 9, a secured
party may perfect a security interest by obtaining “control.”23 UCC Section 8-106(d) defines
“control” as including being the recognized entitlement holder of the security entitlement.24 By
virtue of these provisions, Participants can know that if they obtain a security entitlement to a
given security, their security interest will be perfected and they will not be exposed to the claims
of adverse claimants. Furthermore, their rights to the securities will not be exposed to the claims
of their securities intermediary’s general creditors.

13

UCC § 8-102(a)(14) (defining “securities intermediary” to include a “clearing corporation”); UCC § 8504(a)(5) (defining “clearing corporation” to include “a person that is registered as a ‘clearing agency’ pursuant to
15 United States Code § 78-c(a)(23), as from time to time amended”).
14
UCC § 8-102(a)(14) (defining “security entitlement” to mean “the rights and property interest of an
entitlement holder with respect to a financial asset specified in Part 5”).
15
UCC § 8-102(a)(8).
16
See UCC § 8-504(a).
17
See UCC § 8-505(a).
18
See UCC § 8-506.
19
See UCC § 8-507(a).
20
See UCC § 8-508.
21
See UCC § 8-503.
22
See UCC § 8-510(a).
23
UCC § 9-106(a); UCC § 9-314.
24
UCC § 8-106(d)(1).

4

Jeffrey Mooney
December 11, 2025
II.

The Preliminary Base Version of the DTCC Tokenization Services

As a user-owned cooperative, DTC aims to develop its services in response to its users’
diverse needs. To that end, DTC has, in coordination with Participants, peers, and technology
providers, explored and facilitated the use of DLT for over nine years to determine how DLT can
be utilized to allow market participants to leverage the benefits of blockchain and tokenization
technology, including mobility (i.e., the ability to transfer an asset across jurisdictions and time
zones without regard to standard trading hours or holidays), decentralization (i.e., the ability for
market participants to access their assets more directly), and programmability (i.e., the ability to
use smart contracts to optimize transfers or allocations of assets), without foregoing the
protection and accountability that a CSD and registered clearing agency such as DTC provides.
To ensure DTC’s consideration of potential uses of DLT incorporates the views of its
Participants and other relevant stakeholders, DTC has consulted with a broad cross-section of the
global financial services industry, including its Participants, end-users, financial market
infrastructures, and the DTCC Digital Launchpad Advisory Council.25 Based upon feedback
received from these sources and ongoing discussions with other market participants, DTC has
identified a technology solution, the DTCC Tokenization Services, that would allow Participants
and/or their agents and designees, as applicable, to instruct DTC to record their security
entitlements to securities held by DTC using DLT (the “Tokenized Entitlements”) rather than
Book-Entry Entitlements. DTC believes that, by using Tokenized Entitlements, market
participants would be able to enhance operational efficiency, liquidity, transparency,
accessibility, and investor opportunity through DLT,26 while retaining the safeguards afforded by
a CSD and registered clearing agency.
DTC has also designed the initial version of the DTCC Tokenization Services, the
Preliminary Base Version, through which Participants and their customers would be able to
explore DLT and its potential benefits for recording their DTC-held securities, in a controlled
production environment, under conditions designed to allow adjustment and refinement, limit
risk of loss and systemic disruption, and provide broader insights as to the technical and
regulatory features necessary to allow Tokenized Entitlements at scale.
Any Participant would be permitted—at the Participant’s election—to participate in the
Preliminary Base Version of the DTCC Tokenization Services, except for Participants for which
DTC has U.S. tax withholding or reporting obligations, or a Treasury International Capital
(“TIC”) reporting obligation, as DTC is still examining the steps necessary to ensure tax and TIC
compliance in relation to Tokenized Entitlements.27

25

The DTCC Digital Launchpad Advisory Council consists of a broad-based, cross-sectional representation
of industry professionals from investment banks, custodians, exchanges, and blockchain-based service providers.
Council members are senior experts in their fields.
26
Hester M. Peirce, Getting Smart – Tokenization and the Creation of Networks for Smart Assets: Opening
Remarks for Tokenization Roundtable (May 12, 2025), available at https://www.sec.gov/newsroom/speechesstatements/peirce-remarks-crypto-roundtable-tokenization-051225.
27
As of October 31, 2025, DTC has U.S. tax withholding and reporting obligations, or a TIC reporting
obligation, for approximately 11 percent of its Participants. Once DTC resolves outstanding tax and TIC compliance
questions, it envisions offering the services to these Participants as well.

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a.

Operational Flow

Under the Preliminary Base Version, any Participant wishing to use the DTCC
Tokenization Services would first need to register with DTC one or more addresses on an
approved blockchain (each, a “Registered Wallet”) for the purpose of holding tokens
corresponding to Tokenized Entitlements. Although Participants must comply with all applicable
laws, including those relating to securities, taxation, and money laundering, as well as sanctions
administered by the Office of Foreign Assets Control (“OFAC”), DTC would perform its own
screenings of Registered Wallets to ensure compliance with the requirements of OFAC.
Participants would be able to establish an unlimited number of Registered Wallets,
including Registered Wallets for the benefit of their customers. Access to and use of Registered
Wallets by a Participant’s customers would be at the discretion of, and agreement between, the
Participant and its customers. However, DTC would only have a relationship with the Participant
itself in regard to Registered Wallets and Tokenized Entitlements.
A Participant with a Registered Wallet would be able to instruct DTC itself and/or via an
agent or designee to tokenize the Participant’s security entitlement to certain eligible securities
(the “Subject Securities”) currently credited to the Participant’s Account (i.e., Book-Entry
Entitlements) (the “Tokenization Instruction”). DTC would only act on a Tokenization
Instruction if certain requirements are satisfied, including that the Participant has a Registered
Wallet(s), the Subject Securities are eligible for tokenization, and the transfer of the Subject
Securities pursuant to the Tokenization Instruction satisfies DTC’s existing risk management
controls—the Collateral Monitor and the Net Debit Cap28—for the instructing Participant’s
Account. In other words, if a Participant does not have a Registered Wallet, does not hold
Subject Securities, or cannot pass DTC’s risk management and compliance controls, then DTC
would not act on the Tokenization Instruction.
Upon acceptance of a Tokenization Instruction, DTC would debit the Subject Securities
from the Participant’s Account and credit them to a “Digital Omnibus Account,” an account on
DTC’s centralized ledger that reflects the sum of all Tokenized Entitlements held in all
Registered Wallets.
DTC would then mint and deliver to the Participant’s specified Registered Wallet tokens
representing the Participant’s security entitlement to the Subject Securities (the “Tokens”). To
perform this function, DTC would utilize “Factory,” DTCC’s open tokenization framework
28

The Collateral Monitor and Net Debit Cap are key risk management controls designed to protect the DTC
settlement system in the event of a Participant default. The Collateral Monitor helps ensure that each Participant’s
intraday net debit obligation (i.e., the amount the Participant is expected to owe at end-of-day settlement at any
given time during the day) is fully backed by eligible collateral (i.e., securities and cash). If the Collateral Monitor
determines that a Participant’s transaction at DTC would not be fully collateralized, then the control prevents the
transaction from processing until there is sufficient collateral. Meanwhile, the Net Debit Cap helps ensure that what
a Participant may owe at end-of-day settlement never exceeds DTC’s liquidity resources by setting a ceiling (i.e., a
cap) on a Participant’s intraday net debit balance. The ceiling is based on the Participant’s historical activity at DTC
and DTC’s available liquidity resources and is irrespective of the Participants total collateral. If a transaction would
result in a Participant breaching its Net Debit Cap, then the control would not allow that transaction to process until
it could do so without breaching the cap. Together, these controls help ensure DTC can complete settlement, without
systemic disruption, notwithstanding a Participant default.

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designed to integrate compliance-aware features, automate complex business workflows, and
enhance the overall functionality of tokenized real-world assets.
By virtue of the foregoing process, the Participant would have converted a Book-Entry
Entitlement (i.e., a security entitlement recorded via a credit to the Participant’s Account) into a
Tokenized Entitlement (i.e., a security entitlement recorded using Tokens on DLT). A Participant
with a Tokenized Entitlement would be able to transfer the Tokens representing its security
entitlement to the Subject Securities directly to the Registered Wallet of another Participant and
would not be required to instruct DTC to effectuate such transfer. See Exhibit 1 for a visual
representation of this process.
Any transfer of Tokens from one Registered Wallet to another Registered Wallet would
be tracked by and visible to DTC. To perform this function, DTC would utilize “LedgerScan,” an
off-chain, DTCC software that resides in the public cloud, to track the movement of the Tokens,
including the Registered Wallets in which they are held, by scanning the underlying blockchains.
Based on this tracking, LedgerScan would make a record of the Tokenized Entitlements
according to the Tokens that are held in each Participant’s Registered Wallet(s). See Exhibit 2
for a visual representation of this process. The technology underpinning LedgerScan would
allow it to track and record Token movements and Registered Wallet holdings in near real-time.
For recording Tokenized Entitlements, LedgerScan’s record would constitute DTC’s official
books and records.
Notably, a Tokenization Instruction would not change the legal framework governing the
Participant’s holdings of the Subject Securities. The Participant would (until it transfers the
Tokens) remain the entitlement holder with a security entitlement to the Subject Securities
subject to the full suite of Article 8’s provisions and protections. The only difference is that DTC
would record such security entitlements through LedgerScan rather than its centralized ledger
system. Once Tokens are transferred, LedgerScan would identify the transfer and reflect the
Participant associated with the transferee Registered Wallet as the holder of the Tokenized
Entitlement and thus the entitlement holder.
Any Participant with a Tokenized Entitlement credited to a Registered Wallet may
instruct DTC to credit the Subject Securities represented by such Tokenized Entitlement to its
Account (i.e., a de-tokenizing instruction, which converts the Tokenized Entitlement back to a
Book-Entry Entitlement in an Account). Upon acceptance of such instruction, DTC would burn
the Tokens in the Participant’s Registered Wallet, debit such Subject Securities from the Digital
Omnibus Account, and credit such Subject Securities to the Participant’s Account. At that point,
the Participant would have a Book-Entry Entitlement, rather than a Tokenized Entitlement. In
addition, a Participant with a Tokenized Entitlement corresponding to Tokens in a Registered
Wallet on one blockchain may instruct DTC to convert the Tokens to a Registered Wallet on a
different blockchain. Upon receipt of such instruction from the Participant, its agent, or its
designee, DTC would burn the original Token in the Registered Wallet on the original
blockchain and issue a new Token to the specified Registered Wallet on the new blockchain.
At all times, the registered ownership of the Subject Securities represented by a
Tokenized Entitlement would not change; the Subject Securities would remain registered in the
name of Cede & Co., DTC’s nominee. In addition, in order to avoid any “double spend” of

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Subject Securities, any Subject Securities credited to the Digital Omnibus Account would not be
transferrable from such account until the corresponding Token is burned. As a result, the
Participant holding a Tokenized Entitlement to a Subject Security would not be able to transfer
its beneficial ownership of the Subject Security through instructions to DTC to make changes to
its centralized ledger. Rather, such Participant would need to effectuate transfers by transferring
the Token on the blockchain (or by instructing DTC to burn or convert the Token) as described
above.
b.

Token Usage

Participants and their customers would be able to use the Tokens held in their Registered
Wallets to engage in the same transactions and activities in relation to their Tokenized
Entitlements as they currently engage in with respect to Book-Entry Entitlements. In particular,
Participants and their customers would be able to enter into securities financing transactions
(e.g., repurchase agreements, reverse repurchase agreements, and securities lending transactions)
involving their Tokenized Entitlements; pledge, title transfer, or otherwise encumber their
Tokenized Entitlements for purposes of obtaining financing or collateralizing transactions; and
sell or transfer on a free-of-payment or delivery-versus-payment basis their Tokenized
Entitlements (though any delivery-versus-payment settlement would occur away from and
without any involvement by DTC, rather than through a delivery-versus-payment instruction to
DTC). Participants and their customers would be able to engage in such activity in a substantially
similar manner to how they do so today. The key difference would be that, instead of a
Participant instructing DTC to effectuate a transfer and DTC recording the transfer of the BookEntry Entitlement through its centralized ledger, the Participant or its customer would cause the
Tokens to be transferred to the transferee’s Registered Wallet and DTC would, through
LedgerScan, identify and record such transfer. Alternatively, if the Participant were seeking to
effectuate a transfer to a Participant that was not participating in the DTCC Tokenization
Services, the Participant would issue to DTC a de-tokenization instruction and, afterwards, an
instruction to transfer the Book-Entry Entitlement resulting from such de-tokenization to the
Participant’s Account.
The Tokens would also allow functionality beyond what is currently feasible with BookEntry Entitlements. Specifically, Participants and their customers would be able to transfer
Tokens (and thus transfer Tokenized Entitlements) at any time, rather than only during DTC’s
hours of operation. As a result, Participants and their customers could, subject to other applicable
legal requirements, facilitate transacting on trading venues that support extended hours trading.
Participants and their customers would also be able to effectuate transfers on a delivery-versuspayment basis with other tokenized assets, to the extent supported by the relevant blockchain and
applicable law. Participants and their customers would also be able to use smart contracts and
other applications in relation to their Tokens. Such smart contracts may allow Participants to
optimize their allocation of securities across various securities financing transactions and
collateralization arrangements, thereby reducing inefficiencies and undue costs.29 Furthermore,
depending on its relationship with its Participant, a customer would be able to effectuate a
29

See DTCC, Transforming Collateral Management with Digital Assets: A DTCC Digital Launchpad
Collaboration with Japanese Securities Clearing Corporation (JSCC) (Oct. 2024), available at
https://www.dtcc.com/-/media/WhitePapers/Transforming-Collateral-Management-With-Digital-Assets-JSCC.pdf.

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transfer of a Token (and thus a Tokenized Entitlement) directly, without needing to wait for the
Participant to act first. Such transfers could serve to minimize delay or risk associated with
issuing multiple levels of instruction.
Consistent with its commitment to open access, DTC would not generally restrict a
Participant’s or its customer’s ability to engage in any of the foregoing activities. However, in
the Preliminary Base Version, DTC would only view the Participant associated with the
Registered Wallet as the entitlement holder. The relationship between the Participant and its
customer would be a bilateral matter between such parties.
c.

Blockchain and Technology Standards

In furtherance of DTC’s commitment to open access, the Preliminary Base Version of the
DTCC Tokenization Services would not prescribe a particular blockchain on which Registered
Wallets must be maintained or a particular tokenization protocol (i.e., suite of governing smart
contracts) to which each Token must be subject. DTC believes that Participants and their
customers should retain broad flexibility to explore various DLT solutions consistent with their
commercial, operational, privacy, and performance needs as well as their regulatory
requirements. Consistent with its role and obligations as a registered clearing agency, DTC
would, however, prescribe objective, neutral, and publicly available requirements for both
blockchains and tokenization protocols aimed at ensuring that the Tokens are only transferrable
to Registered Wallets, that DTC can take steps to address any corporate actions, erroneous
entries, lost tokens, or malfeasance (“Conditions Requiring Reversal”), as needed, and that
Tokens are maintained on blockchains that are reliable, resilient, secure, subject to robust
consensus and governance mechanisms, and where LedgerScan is able to view and record
transactions so as to maintain the necessary tokenization books and records in alignment with the
“observability” principle described just below.
More specifically, as relates to tokenization protocols, DTC would permit a Participant,
when issuing a Tokenization Instruction, to specify which DTC-supported tokenization protocol
it would like to govern the Token. In order for DTC to support a tokenization protocol, DTC
must have determined, through both analysis and testing, that the protocol demonstrates
“compliance aware” features, including “distribution control” and “transaction reversibility.”
Distribution control refers to the ability of the protocol to prevent the Token from being
transferred to any address other than a Registered Wallet. Transaction reversibility refers to the
ability of the protocol to allow DTC to force convert or transfer the Token using DTC’s “root
wallet” on the blockchain when necessary to address a Condition Requiring Reversal.
DTC has identified certain protocols, such as ERC 3643, that are compliance-aware and
intends to examine additional protocols based on Participant demand. In doing so, DTC
anticipates prioritizing its review based on those protocols that have the greatest Participant
demand and that can be integrated most readily into the DTCC Tokenization Services. DTC
intends to make available to Participants a list of supported tokenization protocols to assist
Participants in evaluating and identifying a preferred tokenization protocol when it issues a
Tokenization Instruction.

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In regards to supported blockchains, DTC similarly plans to make available to
Participants a list of public and private distributed ledgers on which a Participant may register a
blockchain address as a Registered Wallet. As with tokenization protocols, DTC intends to
support the broadest range of distributed ledgers that can demonstrate the ability to satisfy the
particular qualifications necessary to ensure that the DTCC Tokenization Services function as
intended. To that end, DTC anticipates evaluating blockchains according to the following
standards:
Reliability, Resilience, and Security. For purposes of including a blockchain in the
Preliminary Base Version, DTC would need to confirm for this limited purpose that the
blockchain demonstrates high reliability and resilience. DTC intends to consider these factors
based on, among other things, the blockchain’s availability, performance, and outage history.
Additionally, DTC would need to satisfy itself that the blockchain is subject to robust
cybersecurity standards, including those consistent with the standards prescribed by the National
Institute of Standards and Technology.
Support for Compliance Aware Features. As with tokenization protocols, DTC would
require that each blockchain supports compliance aware tokenization so that Tokens are only
transferrable to Registered Wallets and that DTC can effectuate the Conditions Requiring
Reversal.
Observability. While DTC would support private blockchains as well as those that allow
privacy protecting technologies, such as zero knowledge proofs, DTC must have the ability to
observe all transfers of Tokens. Accordingly, DTC would only support a blockchain if the
blockchain—either on its own or through supporting technologies—allows DTC to review all
transfers of Tokens on the blockchain.
Governance and Consensus. DTC anticipates supporting blockchains that have a range of
governance models, including Proof of Work, Proof of Stake, and private permissioned
networks. However, in order for DTC to support a blockchain, DTC must satisfy itself that the
governance model of the network does not make it susceptible to bad actor or hostile nation state
exploitation, frequent forking, or governance uncertainty.
As with tokenization protocols, DTC anticipates prioritizing its review of proposed
blockchains based on those that have the greatest Participant demand and that can be integrated
most readily into the DTCC Tokenization Services. In addition, DTC anticipates prioritizing its
review of those that can scale to meet investor demand without incurring large variation in gas
fees.
DTC believes that the foregoing standards (the “Technology Standards”) would allow it
to support the broadest range of investor choice and exploration, without compromising the
safeguarding of securities.
d.

Corporate Actions

The Preliminary Base Version of the DTCC Tokenization Services would support the
processing of the same corporate actions with respect to securities represented by Tokenized
Entitlements as DTC supports for Book-Entry Entitlements. In certain instances, a Participant
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may need to issue a de-tokenization instruction or DTC may need to force convert the Tokenized
Entitlement into a Book-Entry Entitlement in order to receive a distribution or replacement
security or to issue instructions in relation to the corporate action. In such situations, DTC would,
to the extent feasible, provide the relevant Participants with advance notice of the need to
provide such instruction or DTC’s need to take such action.
In subsequent versions of the DTCC Tokenization Services, DTC may also provide
additional functionalities in relation to corporate actions. For example, DTC may permit
Participants with Tokenized Entitlements to instruct DTC to convert cash dividends into
stablecoins or tokenized deposits and to deposit such stablecoins or tokenized deposits into the
Participant’s Registered Wallet. In addition, the corporate actions may involve new processes
leveraging smart contracts or DLT. However, such functionalities are not the subject of this
current request, and as discussed in Section III.a, below, prior to any expansion beyond the
Preliminary Base Version, DTC would notify the Commission of its intent to expand, provide a
description of the parameters of each new development, and seek relief to the extent necessary.
e.

Design Controls

The Preliminary Base Version of the DTCC Tokenization Services includes numerous
design controls that aim to ensure the safeguarding of securities holdings, open access, and the
prompt and accurate clearance and settlement of securities transactions while significantly
limiting the risk of loss and preventing systemic disruption.
No Collateral or Settlement Value. DTC would not give Tokenized Entitlements any
collateral value for purposes of calculating a Participant’s Net Debit Cap or the Collateral
Monitor, the mechanisms that DTC uses to ensure that a Participant’s net debit balance do not
exceed DTC’s liquidity resources and that a Participant’s net debit obligation at DTC is fully
collateralized.30 Nor would DTC give any Tokenized Entitlement any settlement value. As a
result, a Participant could only issue a Tokenization Instruction if it would have been able to
instruct DTC to make a free delivery of the Subject Securities. By virtue of these limitations,
neither DTC nor its Participants would be reliant on any Tokenized Entitlements or Subject
Securities held in the Digital Omnibus Account to manage a Participant’s default.
Only Highly Liquid Securities. DTC would only permit a Participant to issue a
Tokenization Instruction for certain highly liquid securities. In particular, only securities in the
Russell 1000 Index at the time the Preliminary Base Version launches as well as any additions to
the index thereafter and irrespective of a security being removed from the index at a later time,
U.S. Treasury securities (i.e., bills, bonds, and notes), and exchange-traded funds (“ETFs”) that
track major indices, such as the S&P 500 index and Nasdaq-100 index, may be Subject
Securities. Limiting Tokenized Entitlements to securities that are highly liquid ensures that
tokenization should not impact trading activity or the market regarding any Subject Securities.
No Double Spend. As mentioned above, DTC would use the Digital Omnibus Account to
eliminate the potential for any double spend of a Participant’s security entitlements. More
specifically, by recording any Subject Securities in the Digital Omnibus Account rather than in
30

Supra note 28.

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the relevant Participant’s Account, DTC would ensure that a Participant cannot both transfer the
Tokens and simultaneously issue an instruction to transfer the Subject Securities to a different
party. That way, consistent with its obligations under Article 8, DTC would continue to hold one
security for each security entitlement.
Only Participants May Register Wallets. Only Participants, which are required to comply
with all applicable laws, including all applicable laws relating to securities, taxation, and money
laundering, as well as sanctions administered and enforced by OFAC, would be permitted to
register wallets with DTC. DTC would also perform screenings on the Registered Wallets to
ensure compliance with OFAC requirements. While a Participant may register a wallet for the
benefit of its customer and even provide that customer with the keys to the wallet,31 during the
operation of the Preliminary Base Version, DTC would only recognize the Participant as the
entitlement holder and the Participant would be fully responsible for the activity in the
Registered Wallet. As a result, DTC’s rights and responsibilities in relation to Tokenized
Entitlements would be equivalent to those in respect of Book-Entry Entitlements.
Transfers Only to Registered Wallets. As discussed above, DTC would use smart contract
technology to ensure that the Tokens can only be transferred to Registered Wallets. As a result,
the Tokens would not be transferable to unknown wallets, and only Participants would be
holders of Tokenized Entitlements.
Override Keys. DTC would have a “root wallet” on each blockchain with keys that it can
use to convert, transfer, mint, or burn any of the Tokens, even without the private key for the
Registered Wallet. These keys would allow DTC to act on any Tokens that have been the subject
of Conditions Requiring Reversal. This override power would provide Participants with
protections similar to those that exist with a centralized ledger but without compromising the
benefits of DLT. DTC would maintain robust security systems to maintain the storage of its
keys. In particular, DTC would store the keys relevant for the DTCC Tokenization Services in
cold storage except for any such keys that are necessary for daily operations.
Only Approved Technology. As mentioned above, all Registered Wallets and smart
contracts would need to satisfy the Technology Standards described above. As discussed above,
these standards aim to ensure a reliable and secure record of Tokenized Entitlements, the ability
of DTC to effectuate the Conditions Requiring Reversal, and that Tokens are only transferred to
Registered Wallets. However, the standards would be narrowly tailored to what DTC determines
is necessary to achieve these ends while ensuring an open access approach.
Resilient and Secure Infrastructure. The new DTCC systems used to perform the key
functions of the Preliminary Base Version of the DTCC Tokenization Service, such as
LedgerScan, would be designated as “Tier 2” systems within DTCC’s internal rating structure by
launch of the Preliminary Base Version. Among other things, Tier 2 systems must have the
ability to operate from both a primary and a secondary location, a maximum of a four-hour
31

“Keys” in a blockchain system refer to security features used to identify participants in the network. In
general, blockchain systems generate two sets of keys for network members. One key is a private key, unique to a
network member, which the member uses to record and encrypt transactions. The other key is a public key that is
common to everyone in the network, which allows others in the network to decrypt and verify transactions recorded
by a specific participant using their private key.

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recovery time objective, no more than two minutes of data loss from an outage, and annual outof-region disaster recovery and resumption testing. Moreover, such new systems could only
instruct DTC’s existing centralized systems in two very limited ways: to deliver Subject
Securities to or from the Digital Omnibus Account or to make a cash payment from a corporate
action event (e.g., a dividend payment). All other touch points between the new systems and
DTC’s existing centralized systems would be read only.
III.

Expected Evolution of the DTCC Tokenization Services and Scope of Relief

DTC is developing the Preliminary Base Version of the DTCC Tokenization Services in
response to feedback from Participants and other stakeholders that recording security
entitlements using DLT would allow them to obtain substantial efficiencies. Its aim is to give
Participants the opportunity to harness the mobility, decentralization, and programmability
opportunities tokenization offers, but in an environment that includes numerous controls to limit
the risks associated with new processes and novel technologies and allow refinements and
adjustments as lessons are learned. However, as described in greater detail below, relief from the
Subject Provisions under the circumstances described is critical in order for DTC to develop and
launch the Preliminary Base Version of the DTCC Tokenization Services. The Subject
Provisions should not apply to DTC’s development and operation of the Preliminary Base
Version since such provisions do not afford the flexibility necessary to accommodate a limited,
voluntary service for which timely adjustments would be required to address lessons, market
participant feedback, or technological developments. In addition, since a number of the Subject
Provisions were designed without regard to distributed ledgers, applying them to DLT can
present challenges akin to “trying to fit a square peg into a round hole.”32 The relief is also
appropriate under the circumstances described below because the design controls of the
Preliminary Base Version would limit the scope of the Preliminary Base Version and include
robust protections to ensure the safeguarding of securities, promote open access, and reduce the
risk of disruption in the clearance and settlement of transactions.
Critically, DTC views the Preliminary Base Version as a step to a broader goal. In
particular, DTC believes that the operation of the Preliminary Base Version in a manner
consistent with the representations described below would provide useful insights to market
participants and the Commission regarding how the various requirements under the Subject
Provisions may be applied in a “sensible manner” to a recordkeeping arrangement involving
DLT.33 Based on such insights and any adjustments that the Commission makes to the Subject
Provisions, DTC envisions expanding the DTCC Tokenization Services over time in a manner
that complies with the Subject Provisions and the broader clearing agency regulatory framework,
as applicable at that time and taking into account any refinements the Commission might make
based on the lessons learned and insights taken from the Preliminary Base Version.

32

Paul S. Atkins, Keynote Address at the Crypto Task Force Roundtable on Tokenization (May 12, 2025),
available at https://www.sec.gov/newsroom/speeches-statements/atkins-remarks-crypto-roundtable-tokenization051225
33
Hester M. Peirce, Getting Smart – Tokenization and the Creation of Networks for Smart Assets: Opening
Remarks for Tokenization Roundtable (May 12, 2025), available at https://www.sec.gov/newsroom/speechesstatements/peirce-remarks-crypto-roundtable-tokenization-051225.

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Below we discuss the planned evolution of the DTCC Tokenization Services and describe
the circumstances surrounding DTC’s proposed operation of the Preliminary Base Version that
support granting the relief.
a.

Expected Evolution of the DTCC Tokenization Services

Initial Testing. Prior to launching the Preliminary Base Version, DTC would engage in
substantial testing of the service with Participants. The testing would aim to ensure that the
Preliminary Base Version will operate as intended and that the design controls described above
are robust and serve their purpose. The testing would also ensure that Participants are able to
begin using the Preliminary Base Version seamlessly when it is launched, which is expected to
be in the second half of 2026.
In particular, in the fall of 2025, DTC engaged in an internal proof of concept using only
synthetic data and assets. This initial testing did not involve the transfer of actual value and the
tokenization was of a defined set of synthetic DTC-eligible assets created solely for the purpose
of testing the proof of concept. DTC transferred the Tokens representing entitlements to the
synthetic assets between two Registered Wallets. At no time did this initial testing involve the
transfer of actual value.
In early 2026, DTC plans to conduct one or more production-based but limited minimum
viable products (“MVPs”) or pilots involving a few, select Participants, a live blockchain, and
real data and assets with limited actual value. The MVPs or pilots would serve as a key step in
testing the core functionality of the DTCC Tokenization Services before later launching the
Preliminary Base Version.
Preliminary Base Version. Provided the Division staff grants the relief requested in this
letter and following the initial testing described above, DTC plans to launch the Preliminary
Base Version of the DTCC Tokenization Services, subject to the parameters described in Section
II.e of this letter, above, in the second half of 2026. The relief requested in this letter is
applicable only to the development and operation of the Preliminary Base Version of the DTCC
Tokenization Services.
Expansion. As DTC garners insights and lessons from the operation of the Preliminary
Base Version, it anticipates eventually expanding the functionality of the DTCC Tokenization
Services beyond the parameters described in Section II.e of this letter. For example, DTC would
consider expanding the scope of eligible securities, allowing Tokenized Entitlements to have
settlement or collateral value, and broadening the services it provides in relation to corporate
actions (e.g., to allow Participants to receive distributions in stablecoins or tokenized deposits).
Prior to any such expansion, DTC would notify the Division staff of its intent to expand, provide
a description of the parameters of each new development, and seek relief to the extent necessary.
Ultimately, as noted above, DTC envisions seeking to operate the DTCC Tokenization
Services in compliance with the Subject Provisions and the broader requirements generally
applicable to registered clearing agencies and CSDs at that time and considering any refinements
made by the Commission based on the lessons learned and insights taken from the Preliminary
Base Version.

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b.

Scope of Relief

DTC respectfully requests that the Division staff assure DTC that it would not
recommend enforcement action to the Commission for violations of the Subject Provisions as a
result of DTC’s development and operation of the proposed Preliminary Base Version of the
DTCC Tokenization Services, which, following advance notice to Division staff, DTC would
launch and operate under the requested relief for a limited period of three (3) years and subject to
the following representations by DTC:
1. DTC would not ascribe to any Tokenized Entitlements any collateral value or settlement
value for purposes of calculating a Participant’s Net Debit Cap or the Collateral Monitor.
By virtue of these limitations, neither DTC nor its Participants would be reliant on any
Tokenized Entitlements or Subject Securities held in the Digital Omnibus Account to
manage a Participant’s default.
2. The securities that are eligible for tokenization would be limited to (i) securities in the
Russell 1000 Index at the time the Preliminary Base Version launches as well as any
additions to the index thereafter and notwithstanding the subsequent removal of any
securities from the index, (ii) U.S. Treasury securities (i.e., bills, bonds, and notes), and
(iii) ETFs that track major indices, such as the S&P 500 index and Nasdaq-100 index.
3. Only Participants would be permitted to register wallets, and the relevant Participant
would be fully responsible for the activity in the Registered Wallet(s).
4. DTC would only register a blockchain address as a Registered Wallet if (i) the blockchain
is a supported blockchain that satisfies the Technology Standards and (ii) DTC has
performed its own screenings of the wallet and confirmed that it complies with OFAC
requirements.
5. All Tokens would be subject to tokenization protocols that satisfy the Technology
Standards, including to ensure that they support distribution control and transaction
reversibility.
6. The Tokens would only be transferable to Registered Wallets.
7. DTC would have the technological capability to transfer any of the Tokens to address
Conditions Requiring Reversal, such as to service a corporate action event, replace lost or
stolen Tokens or correct erroneous transfers.
8. The new DTCC systems used to perform the key functions of the DTCC Tokenization
Service, such as LedgerScan, would maintain a Tier 2 or better system rating, within
DTCC’s internal rating structure, from time of launch of the Preliminary Base Version,
and the only two instructions such new systems could give DTC’s existing centralized
systems are to (i) deliver Subject Securities to or from the Digital Omnibus Account or
(ii) make a cash payment from a corporate action event, whereas all other touch points
would be read only.

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December 11, 2025
9. If DTC identifies that a disruption, compliance issue, or intrusion of or into any of the
new systems used to perform the key functions of the Preliminary Base Version has
occurred that materially impacts, or is reasonably likely to materially impact, the
operation of the Preliminary Base Version (a “Systems Event”), DTC would (i) notify the
Division staff as soon as reasonably practicable following a Systems Event, (ii) keep the
Division staff informed as DTC works to resolve the Systems Event, and (iii) notify the
Division staff once the Systems Event is resolved.
10. Following the end of each calendar quarter, DTC would provide a quarterly report
package to Division staff no later than 30 calendar days following each quarter’s end
date. The report package would contain the following information for the calendar quarter
covered in the report:
•

the identities of the Participants participating in the Preliminary Base Version as of
the end of the quarter;

•

the total number of shares and total value of security entitlements that have been
tokenized pursuant to a Tokenization Instruction during the quarter;

•

the total number of shares and total value of security entitlements as of the end of the
quarter maintained as Tokenized Entitlements;

•

the average daily volume of Tokenized Entitlements transferred between Participants
during the quarter;

•

the total number of security entitlements (i.e., count of CUSIPs) that have been detokenized during the quarter;

•

the list of securities eligible to be Subject Securities as of the end of the quarter;

•

the number of Registered Wallets at the end of the quarter;

•

the names of the blockchains on which Tokens were recorded during the quarter;

•

the names of any blockchains DTC has determined not to approve for inclusion in the
Preliminary Base Version during the quarter and the reason for such;

•

the names of any blockchains that DTC has approved for inclusion in the Preliminary
Base Version that DTC knew to be unavailable during the quarter for the service;

•

any instances in which DTC used its “root wallet” to address Conditions Requiring
Reversal, other than to service a corporate action even, during the quarter; and

•

any disclosures made to Participants under representation 13 of this section during the
quarter.

11. Executive management of DTC would provide DTC’s board of directors with the
materials provided to the Division staff described in representations 9 and 10.
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Jeffrey Mooney
December 11, 2025
12. DTC would provide Participants the ability to view, via LedgerScan, the Tokens that they
hold in their Registered Wallets.
13. DTC would provide Participants with disclosures regarding the mechanics and operation
of the Preliminary Base Version and would give Participants reasonable advance notice in
writing of any material changes to the service.
14. DTC would disclose to Participants (i) the Technology Standards and any changes
thereto, (ii) the names of the blockchains that DTC has approved for inclusion in the
Preliminary Base Version, and (iii) any DTC fees or charges for access to or use of the
Preliminary Base Version.
15. Participants eligible to participate in the Preliminary Base Version would be permitted to
participate at will and would be able to begin or cease participating at any time upon
notification and instruction to DTC.
16. DTC would make information and data maintained in its systems available to Division
staff upon request.
Prior to implementing any changes to the above representations, DTC would notify the
Division staff of its intent to change any such representation(s) and, if necessary, re-engage with
the Division staff regarding proposed updates to the relief.
IV.

Relief from Section 19(b) and Rule 19b-4
a.

SRO Rule Filing Requirements

Section 19(b)(1) of the Exchange Act requires each self-regulatory organization (“SRO”),
including any registered clearing agency, to file with the Commission copies of any proposed
rule or any proposed change in, addition to, or deletion from the rules of such SRO (collectively,
“proposed rule changes”) in accordance with such rules as the Commission may prescribe.
Pursuant to this authority, the Commission adopted Rule 19b-4 which establishes the rule filing
procedures in accordance with Section 19(b), including a requirement that proposed rule changes
must be submitted on Form 19b-4 in accordance with the “General Instructions” thereto. Once a
proposed rule change has been filed, the Commission is required to publish it in the Federal
Register to provide an opportunity for public comment. A proposed rule change generally may
not take effect unless the Commission approves it, or it otherwise becomes effective under
Section 19(b).
Section 19(b)(2) of the Exchange Act sets forth the standards and time periods for
Commission action either to approve, disapprove, or institute proceedings to determine whether
the proposed rule change should be disapproved. The Commission must approve a proposed rule
change if it finds that the underlying rule change is consistent with the requirements of the
Exchange Act and the rules and regulations thereunder applicable to the SRO proposing the rule
change. In general, the Commission is required to issue an order approving or disapproving the
proposed rule change not later than 180 days after the date of publication in the Federal Register;
however, the Commission may extend the period by up to 60 days if it determines that a longer
period is appropriate and publishes the reasons for such determination or the SRO that filed the
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December 11, 2025
proposed rule change consents to the longer period. Thus, a proposed rule change filed pursuant
to Section 19(b)(2) can take up to 240 days after being published in the Federal Register to be
approved.
Section 19(b)(3)(A) of the Exchange Act provides that a proposed rule change may
become effective upon filing with the Commission, without pre-effective notice and opportunity
for comment, if it is appropriately designated by the SRO as (i) constituting a stated policy,
practice, or interpretation with respect to the meaning, administration, or enforcement of an
existing rule of the SRO; (ii) establishing or changing a due, fee, or other charge imposed by the
SRO on any person, whether or not the person is a member of the SRO; or (iii) relating solely to
the administration of the SRO. Section 19(b)(3)(A) also provides the Commission with the
authority, by rule and when consistent with the public interest, to designate other types of
proposed rule changes that may be effective upon filing with the Commission. Rule 19b-4(c)
provides that a “stated policy, practice, or interpretation” of an SRO will be deemed to be a
proposed rule change unless (i) it is reasonably and fairly implied by an existing rule of the SRO
or (ii) it is concerned solely with the administration of the SRO and is not a stated policy,
practice, or interpretation with respect to the meaning, administration, or enforcement of an
existing rule of the SRO. Rule 19b-4(a)(6) defines the term “stated policy, practice, or
interpretation” to mean (i) any material aspect of the operation of the facilities of the SRO; or (ii)
any statement made generally available to the membership of, to all participants in, or to persons
having or seeking access (including, in the case of national securities exchanges or registered
securities associations, through a member) to facilities of, the SRO (“Specified Persons”), or to a
group or category of Specified Persons, that establishes or changes any standard, limit, or
guideline with respect to (A) the rights, obligations, or privileges of Specified Persons or, in the
case of national securities exchanges or registered securities associations, persons associated
with Specified Persons; or (B) the meaning, administration, or enforcement of an existing rule.
Section 19(b)(3)(B) of the Exchange Act provides that a proposed rule change may be put
into effect summarily if it appears to the Commission that such action is necessary for the
protection of investors, the maintenance of fair and orderly markets, or the safeguarding of
securities or funds, and provides that any proposed rule change so put into effect shall be filed
promptly thereafter with the Commission under Section 19(b)(1) of the Exchange Act. A
proposed rule change put into effect summarily under Section 19(b)(3)(B) is also subject to the
procedures of Section 19(b)(2) and is therefore summarily effective only until the Commission
(i) enters an order, pursuant to Section 19(b)(2)(A) of the Act, to approve or disapprove such
proposed rule change; or (ii) institutes proceedings to determine whether the proposed rule
change should be disapproved.
Section 19(b)(3)(C) of the Exchange Act grants the Commission the authority to
temporarily suspend a proposed rule change of an SRO that has taken effect pursuant to either
Section 19(b)(3)(A) or 19(b)(3)(B) of the Exchange Act within 60 days of its filing if it appears
to the Commission that such action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of the Exchange Act. If the
Commission takes such action, it is then required to institute proceedings to determine whether
the proposed rule change should be approved or disapproved.

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December 11, 2025
With respect to clearing agencies in particular, Title VIII of the Dodd-Frank Act, titled
the Payment, Clearing, and Settlement Supervision Act of 2010 (“Clearing Supervision Act” or
“Title VIII”), included provisions for the enhanced regulation of financial market utilities
(“FMUs”), including clearing agencies, that manage or operate a multilateral system for the
purpose of transferring, clearing or settling payments, securities or other financial transactions
among financial institutions or between financial institutions and the FMU. The regulatory
regime in Title VIII applies to FMUs that FSOC designates as systemically important (or likely
to become systemically important) in accordance with Section 804 of the Clearing Supervision
Act (each such designated FMU, a “SIFMU”). Following the publication of its final rule
outlining the criteria, processes, and procedures for the designation of FMUs on July 27, 2011,
the FSOC proposed the designation of an initial set of FMUs as systemically important on May
22, 2012. At its July 18, 2012, meeting, the FSOC voted unanimously to designate eight FMUs,
including DTC, as systemically important under Title VIII.
Among other requirements prescribed under Title VIII, Section 806(e) requires any
SIFMU to file 60 days in advance notice of changes to its rules, procedures, or operations that
could “materially affect the nature or level of risk presented” by the SIFMU (“Advance Notice”).
In addition, Section 806(e) requires each “Supervisory Agency,” including the SEC, to adopt
rules, in consultation with the Board of Governors of the Federal Reserve, that define and
describe when a SIFMU is required to file an Advance Notice with its Supervisory Agency. In
2012, the SEC implemented this mandate through amendments to Rule 19b-4 and Form 19b-4.
Specifically, Rule 19b-4(n)(2) provides that the phrase “materially affect the nature or level of
risks presented,” when used to qualify determinations on a change to rules, procedures, or
operations at a registered clearing agency designated as a SIFMU (a “designated clearing
agency”), means “matters as to which there is a reasonable possibility that the change could
affect the performance of essential clearing and settlement functions or the overall nature or level
of risk presented by the designated clearing agency.” The rule provides further that these “may
include, but are not limited to, changes that materially affect participant and product eligibility,
risk management, daily or intraday settlement procedures, default procedures, system safeguards,
governance or financial resources of the designated clearing agency.” In contrast, changes that
may not materially affect the nature or level of risk presented include “[c]hanges to an existing
procedure, control, or service that do not modify the rights or obligations of the designated
clearing agency or persons using its payment, clearing, or settlement services and that do not
adversely affect the safeguarding of securities, collateral, or funds in the custody or control of the
designated clearing agency or for which it is responsible; or [c]hanges concerned solely with the
administration of the designated clearing agency or related to the routine, daily administration,
direction, and control of employees.”
b.

Analysis and Request for Relief

The process for proposed rule changes under Section 19, as implemented through Rule
19b-4 thereunder, provides the Commission and the public with an important opportunity to
review and assess an SRO’s proposed rule changes; however, the process is necessarily time
intensive and operationally burdensome and prevents SROs from making needed changes to their
rules on an expedited basis unless they meet the strictures of Section 19(b)(3)(A) and Rule
19b-4(f) with respect to “immediately effective” rule filings. Even then, however, the
Commission retains the right to temporarily suspend any such proposed rule change within 60
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days from filing. Accordingly, while DTC envisions ultimately complying with the requirements
of Section 19 and Rule 19b-4 in full for the DTCC Tokenization Services, it believes that relief is
necessary and appropriate for the development and operation of the Preliminary Base Version—
which would be a limited and purely voluntary service—if conducted in accordance with the
representations set forth above. In particular, DTC requests that the Division staff assure DTC
that it would not recommend enforcement action to the Commission if DTC does not file
proposed rule changes pursuant to Section 19(b) and Rule 19b-4 or the Advance Notice filings
under Section 806(e) in connection with the Preliminary Base Version of the DTCC
Tokenization Services.
If conducted consistently with the representations and limitations described above, DTC
believes that the development and operation of the Preliminary Base Version should not be
subject to the rule filing requirements of the Exchange Act and Section 806(e). Moreover, as a
practical matter, relief from the rule filing requirements under Section 19(b) and Rule 19b-4 is
necessary because the logistics, timeframe, and public comment process associated with
proposed rule changes filed pursuant to Rule 19b-4 would present practically insurmountable
challenges to launching the Preliminary Base Version. As described above, the Preliminary Base
Version would be a limited and voluntary offering. Its aim would be to allow certain Participants
to elect to have their security entitlements recorded using new technologies that may present
opportunities as well as challenges. In order for this preliminary service to be successful, it
would be important for DTC to be able to make changes to various aspects of the service on a
routine basis (provided those changes remain in conformance with the relief granted by the
Division). In particular, DTC would need to be able to respond dynamically to feedback from
Participants and service providers, among others, as well as to changing technological
developments and its own experiences in operating the service. Effectuating those changes with
the promptness required to ensure the continuing utility of the service for Participants would be
difficult if not impossible to accomplish if DTC were required to submit a proposed rule change
and potentially wait for up to 240 days to effectuate each such change.
The relief is appropriate because the development and operation of the Preliminary Base
Version of the DTCC Tokenization Services is purposefully designed to be narrow and is not
intended or expected to be a “material aspect of the operations of the facilities” of DTC; nor
would it “materially affect the nature or level of risk presented” by DTC. As discussed above, the
Preliminary Base Version of the DTCC Tokenization Services would be limited to highly liquid
securities, and DTC would give Subject Securities no collateral or settlement value at DTC.
Accordingly, the service would not be material to DTC’s default management, would not affect
DTC’s processing of delivery-versus-payment instructions, including those related to the
National Securities Clearing Corporation (“NSCC”), and would not impact trading activity or the
market regarding any Subject Securities. The lack of collateral and settlement value and the
eligibility requirements for the Subject Securities would also likely lead Participants to tokenize
a smaller proportion of securities in the Preliminary Base Version, thereby further keeping the
scope of the service narrow.
The relief is also appropriate because the Preliminary Base Version would be entirely
voluntary. As mentioned above, DTC would make available to interested Participants disclosures
describing the Preliminary Base Version and, for on-boarded Participants, reasonable notice of
any material changes to the extent practical. Accordingly, Participants would only be subject to
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Jeffrey Mooney
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the requirements of the service if they so choose. If a Participant chooses not to participate or
initially participates but then objects to a change DTC is proposing to make to the service, the
Participant can instruct DTC to de-tokenize any existing Tokenized Entitlements and can
continue to have its security entitlements recorded by DTC as Book-Entry Entitlements subject
to DTC’s Rules and procedures adopted pursuant to Rule 19b-4. Moreover, DTC would collect
input from and engage frequently with various stakeholders, including the DTCC Digital
Launchpad Advisory Council, regarding the DTCC Tokenization Services. Such engagement
would ensure that DTC is providing an opportunity for Participants and other stakeholders to
understand and weigh in on developments related to the service.
Finally, DTC would provide quarterly reports and prompt notification of any Systems
Event to the Division staff regarding the Preliminary Base Version. Consequently, the relief
would not serve to interfere with the Commission’s oversight of the service. DTC would make
the LedgerScan system and data available to Division staff upon request, and the Commission
would, of course, retain the ability to request any information from DTC it deems necessary to
ensure appropriate oversight.
V.

Covered Clearing Agency Standards
a.

Rule 17ad-22(e) Background

As a registered clearing agency that provides CSD services, DTC is a “covered clearing
agency” (or a “CCA”) as defined in Rule 17ad-22 under the Exchange Act. DTC is therefore
required to comply with the CCA Standards, which require CCAs to establish, implement,
maintain, and enforce written policies and procedures covering a variety of topics concerning
their operation and governance. These topics include:
•

general organization (including legal basis, governance, and a framework for the
comprehensive management of risks);

•

financial risk management (including credit risk, collateral, margin, and liquidity
risk);

•

settlement (including settlement finality, money settlements, and physical
deliveries);

•

CSDs and exchange-of-value settlement systems;

•

default management (including default rules and procedures and segregation and
portability);

•

business and operational risk management (including general business risk,
custody and investment risks, and operational risk);

•

access (including access and participation requirements, tiered participation
arrangements, and links);

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•

efficiency (including efficiency and effectiveness and communication procedures
and standards); and

•

transparency.34

The Commission has explained that the primary goals of the CCA Standards are to
enhance the stability of the U.S. securities markets, promote financial stability through the
application of enhanced requirements for CCAs, promote market integrity, improve the
robustness of clearing systems, and protect the financial system against contagion.35 The
Commission explained that it believes the CCA Standards achieve these goals by “supporting the
objectives of (i) the Exchange Act to facilitate the establishment of a national system for the
prompt and accurate clearance and settlement of securities transactions and linked or coordinated
facilities for clearance and settlement of securities transactions, having due regard for the public
interest, the protection of investors, the safeguarding of securities and funds, and maintenance of
fair competition among brokers and dealers, clearing agencies, and transfer agents, and (ii) the
Clearing Supervision Act to promote robust risk management, promote safety and soundness,
reduce systemic risks, and support the stability of the broader financial system.”36
b.

Analysis and Request for Relief

DTC fully expects the DTCC Tokenization Services to ultimately adhere to the CCA
Standards. However, imposing such exacting and wide-ranging requirements on the Preliminary
Base Version would be unworkable and is not necessary in order to ensure the purpose behind
the CCA Standards. Accordingly, DTC requests that the Division staff assure DTC that it would
not recommend enforcement action to the Commission for violations of the CCA Standards if
DTC develops and operates the Preliminary Base Version consistent with the representations in
this request.
DTC believes that the CCA Standards should not apply to the development and operation
of the Preliminary Base Version because the CCA Standards are designed for systemically
important systems that largely remain fixed over time. Their demanding requirements are
fundamentally inconsistent with a limited experimental system that aims to respond dynamically
in a rapidly changing technological landscape and is limited in scope and application as
described above. In order to develop and operate the Preliminary Base Version, DTC would need
to leverage systems and technology that have been comprehensively tested, but are still
somewhat novel, and to make adjustments as new developments arise. DTC would not be able to
make adjustments to the service as necessary if it is required to ensure that each feature of the
Preliminary Base Version satisfies each CCA Standard at all relevant times. For example, it
would be impractical and needlessly delay innovation were DTC required to wait to make any
change to the Preliminary Base Version until it determined whether the change had a high degree
of “scalable capacity.”37 In certain cases, the contemplated change may not currently be scalable,
but may become so in the future if it is successful. In addition, at least for the Preliminary Base
34

Standards for Covered Clearing Agencies, Securities and Exchange Commission, Exchange Act Release
No. 34-78961, 81 FR 70786 at 70792 (Oct. 13, 2016) (the “Rule 17ad-22(e) Adopting Release”).
35
Id. at 70793.
36
Id.
37
17 C.F.R. § 240.17ad-22(e)(17)(ii).

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Version, it would be unduly burdensome for DTC to identify and mitigate each source of
operational risk that may arise through a Participant’s use of Tokens,38 and to incorporate each
feature of the Preliminary Base Version into its internal auditing processes.39
Relief is also necessary because the applicability of some CCA Standards is unclear or
infeasible in the context of a decentralized recordkeeping system like the DTCC Tokenization
Services. For example, it is unclear how the internal auditing requirements would apply to
Registered Wallets and associated blockchains, and it would likely be impossible to subject
certain blockchains to business continuity requirements. Accordingly, absent relief, DTC would
effectively be unable to offer the Preliminary Base Version or make changes to it in a dynamic
manner.
Relief from these provisions is also appropriate, as the limited scope of the Preliminary
Base Version operated consistently with the representations in this request would ensure that the
service does not implicate the concerns on which the Commission was focused when it adopted
the CCA Standards. The CCA Standards were designed for CCAs “to address the activity and
risks that their size, operation, and importance pose to the U.S. securities markets, [and] the risks
inherent in the products they clear.”40 As discussed above, the Preliminary Base Version would
be a limited, voluntary service involving highly liquid securities and numerous risk controls.
These controls would ensure that neither DTC nor the broader securities market would face risk
of material loss or disruption on account of any challenges involving the Preliminary Base
Version. In particular, by not extending to Subject Securities any collateral or settlement value,
DTC would ensure that it is not dependent on the availability of those securities to address a
distress situation involving one of its Participants. Furthermore, through the Technology
Standards and override keys, DTC would be able to ensure that it can address any Conditions
Requiring Reversal. Accordingly, the operation of the Preliminary Base Version would not be of
a size, operation or importance to pose a risk to the U.S. securities markets.
Finally, while DTC is requesting that the Division staff assure DTC that it would not
recommend enforcement action to the Commission for violations of the CCA Standards as
applied to the development and operation of the Preliminary Base Version of the DTCC
Tokenization Services, as a registered clearing agency DTC would still be subject to the more
general requirements of Section 17A of the Exchange Act, which outlines the requirements for
clearing agencies, including that the rules of a clearing agency must be “designed to promote the
prompt and accurate clearance and settlement of securities transactions … to assure the
safeguarding of securities and funds which are in the custody or control of the clearing agency or
for which it is responsible, to foster cooperation and coordination with persons engaged in the
clearance and settlement of securities transactions, to remove impediments to and perfect the
mechanism of a national system for the prompt and accurate clearance and settlement of
securities transactions, and, in general, to protect investors and the public interest.”41 In addition,
Section 17A requires that the rules of a clearing agency “not impose any burden on competition
not necessary or appropriate in furtherance of the purposes of this chapter.”42 As discussed
38
39
40
41
42

17 C.F.R. § 240.17ad-22(e)(17)(i).
17 C.F.R. § 240.17ad-22(e)(11)(ii).
Rule 17ad-22(e) Adopting Release at 70793.
15 U.S.C. § 78q-1(b)(3)(F).
15 U.S.C. § 78q-1(b)(3)(I).

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above, DTC has designed the Preliminary Base Version of the DTCC Tokenization Services,
including the Technology Standards, to ensure open access and not to favor any particular
system or provider. DTC believes these standards comport with Section 17A’s requirements, and
any changes would need to continue to comply. In addition, DTC would provide comprehensive
reporting to the Commission so that they can monitor the consistency of the Preliminary Base
Version with Section 17A.
VI.

Senior Management/Board Obligation
a.

Rule 17ad-25 Background

As a registered clearing agency, DTC is subject to the recently adopted Exchange Act
Rule 17ad-25, addressing clearing agency boards of directors and conflicts of interest. Rule
17ad-25(i) requires clearing agencies to establish, implement, maintain, and enforce written
policies and procedures reasonably designed to manage risks related to relationships with
“service providers for core services,” which is defined to mean any person that “directly supports
the delivery of clearance or settlement functionality or any other purposes material to the
business of the registered clearing agency.” Among other things, Rule 17ad-25(i) requires senior
management to submit to the board of directors for review and approval any agreement that
would establish a relationship with a service provider for “core services,” along with a risk
evaluation for such agreement. Rule 17ad-25(j) requires clearing agencies to establish,
implement, maintain, and enforce written policies and procedures reasonably designed to require
the board of directors to solicit, consider, and document its consideration of the views of
participants and other relevant stakeholders of the registered clearing agency regarding material
developments in its risk management and operations on a recurring basis.
In the release adopting Rule 17ad-25, the Commission explained that Rule 17ad-25(i) is
aimed at cases where “failure of the service provider to perform its obligations would pose
significant operational risks and have critical effects on the ability of the registered clearing
agency to perform its risk management function and facilitate prompt and accurate clearance and
settlement,” and where “absent regular monitoring and oversight, these relationships could
endanger the operational resilience of a registered clearing agency and call into question the
registered clearing agency’s ability to meet its obligations under the Exchange Act.”43 The
Commission further explained that the rule is “meant to capture outsourced services directly
applicable to core clearance and settlement functionality.”44
The Commission also explained that the purpose of Rule 17ad-25(j) is “for registered
clearing agencies to solicit, consider, and document their consideration of the views of
participants and other relevant stakeholders regarding material developments in their risk
management and operations,”45 and that such stakeholders should be allowed to comment on the
operations of a registered clearing agency, including “the design and functioning of the processes

43

Clearing Agency Governance and Conflicts of Interest, Securities and Exchange Commission, Exchange
Act Release No. 34-98959, 88 FR 84454 at 84476 (Dec. 5, 2023) (the “Rule 17ad-25 Adopting Release”).
44
Id.
45
Id. at 84485.

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and technology systems that support the infrastructure of the registered clearing agency itself,
and the way that participants and other stakeholders connect to such systems.”46
b.

Analysis and Request for Relief

DTC does not believe the Preliminary Base Version, operated consistently with the
representations in this request, would be a “core service” of DTC as it is limited and voluntary.
Consequently, DTC requests the Division staff assure DTC that it would not recommend
enforcement action to the Commission under Rule 17ad-25(i) and (j) in connection with the
Preliminary Base Version of the DTCC Tokenization Services if DTC develops and operates the
service in accordance with the representations above. As discussed above, relief from these rules
is also necessary as a practical matter because in the Preliminary Base Version, DTC would need
flexibility to make real-time adjustments to develop or improve systems and processes in
response to Participant, technical, operational, and other needs. Requiring DTC’s board of
directors to review and approve, and requiring senior management to conduct a risk evaluation
of, any such change would unnecessarily stifle DTC’s ability to develop, test, and implement
solutions and respond to feedback dynamically. Similarly, while DTC has and continues to
solicit and consider views of Participants and other stakeholders in designing these systems, and
plans to continue doing so in the future, the formal process required by these rules for
amendments would be ill-fitted for the Preliminary Base Version, when DTC needs to react
promptly.
Relief from these provisions is also appropriate given their purpose—namely to protect
the core clearance and settlement function and to give stakeholders a voice in decisions that
would affect the infrastructure of the system. The changes that DTC would need to make to the
Preliminary Base Version of the DTCC Tokenization Services would not affect DTC’s core
clearance and settlement functions. As discussed above, the Preliminary Base Version would be
a strictly voluntary service that would allow Participants to elect to have DTC record a limited
scope of security entitlements using DLT rather than a centralized ledger. It would not affect
DTC’s processing of delivery-versus-payment instructions, including those involving NSCC, or
DTC’s management of Participant defaults. It would not affect the legal framework of DTC’s
holdings or how DTC holds securities. It would simply involve using, at the request of a
Participant, different technology to reflect changes in ownership. Moreover, there would be
numerous features in place to ensure limited risk of disruption, including robust and objective
Technology Standards, a Digital Omnibus Account to ensure there is no “double spending,” the
ability for DTC to address Conditions Requiring Reversal, and reporting of any Systems Events
and any use by DTC of the root wallet. Furthermore, since the service would be strictly voluntary
and limited and DTC would continue to engage regularly with its Participants and other
stakeholders, DTC believes it would not implicate the concerns underlying Rule 17ad-25(j). To
the extent it did, DTC has consulted on the Preliminary Base Version with a broad cross-section
of its stakeholders, including Participants, end-users, financial market infrastructures, the DTCC
Digital Launchpad Advisory Council, and other stakeholders. Moreover, DTC would continue to
engage in broad stakeholder consultation and leverage its established internal governance

46

Id. at 84485–85.

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processes, particularly in regards to any contemplated material changes to the DTCC
Tokenization Services.
Lastly, as also discussed above, while DTC is seeking relief from Rule 17ad-25(i) and (j)
as applied to the Preliminary Base Version of the DTCC Tokenization Services, DTC would still
be subject to the more general requirements of Section 17A of the Exchange Act.
VII.

Regulation SCI
a.

Reg SCI Background

As an “SCI SRO” and, therefore, an “SCI entity” as defined in Reg SCI Rule 1000, DTC
is subject to the requirements of Reg SCI, which include the requirements to “establish,
maintain, and enforce written policies and procedures reasonably designed to ensure that its SCI
systems and, for purposes of security standards, indirect SCI systems, have levels of capacity,
integrity, resiliency, availability, and security, adequate to maintain the SCI entity’s operational
capability and promote the maintenance of fair and orderly markets” and to “establish, maintain,
and enforce written policies and procedures reasonably designed to ensure that its SCI systems
operate in a manner that complies with the [Exchange] Act and the rules and regulations
thereunder and the entity’s rules and governing documents, as applicable.”47 Reg SCI Rule
1001(a)(4) provides that these policies and procedures are deemed to be “reasonably designed” if
they are consistent with “current SCI industry standards.”48
An “SCI system” is defined in Reg SCI Rule 1000 to mean “all computer, network,
electronic, technical, automated, or similar systems of, or operated by or on behalf of, an SCI
entity that, with respect to securities, directly support trading, clearance and settlement, order
routing, market data, market regulation, or market surveillance.”49 In the release adopting Reg
SCI, the Commission explained that the definition of “SCI system” was “limited to apply to
production systems that relate to securities market functions, and in particular to those six
functions—trading, clearance and settlement, order routing, market data, market regulation, or
market surveillance—that traditionally have been considered to be central to the functioning of
the U.S. securities markets.”50 Furthermore, the Commission emphasized that the focus of the
definition was to identify systems providing functions that “may pose a significant risk to the
maintenance of fair and orderly markets if their capacity, integrity, reliability, availability or
security is compromised.”51
In addition to “SCI systems,” Reg SCI Rule 1000 defines a “critical SCI system” to mean
any “SCI systems of, or operated by on behalf of, an SCI entity that (1) directly support
functionality relating to (i) clearance and settlement systems of clearing agencies; (ii) openings,
47

17 C.F.R. § 240.1001(a)(1); (b)(1).
In the Reg SCI Adopting Release, the Commission stated that the staff should issue guidance to assist SCI
entities in developing policies and procedures consistent with “current SCI industry standards” and that the staff
guidance should assist SCI entities in developing policies and procedures consistent with “current SCI industry
standards.” See, e.g., Staff Guidance on Current SCI Industry Standards (Nov. 14, 2014).
49
17 C.F.R. § 240.1000.
50
Regulation Systems Compliance and Integrity, Securities and Exchange Commission, Exchange Act
Release No. 34-73639, 79 FR 72252 at 72273 (Dec. 5, 2014) (the “Reg SCI Adopting Release”).
51
Id.
48

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Jeffrey Mooney
December 11, 2025
reopenings, and closings on the primary listing market; (iii) trading halts; (iv) initial public
offerings; (v) the provision of market data by a plan processor; or (vi) exclusively-listed
securities; or (2) provide functionality to the securities markets for which the availability of
alternatives is significantly limited or nonexistent and without which there would be a material
impact on fair and orderly markets.” Reg SCI Rule 1001 requires that an SCI entity’s business
continuity and disaster recovery plans should be reasonably designed to ensure two-hour
resumption of any critical SCI systems following a wide-scale disruption.
Reg SCI contains additional requirements regarding “SCI events” defined in Reg SCI
Rule 1000 to include “systems disruptions,” “systems compliance issues” and “systems
intrusions,” each of which refers to events related to SCI systems. If an SCI event occurs, Reg
SCI Rule 1002 requires the SCI entity to take corrective action, to notify the Commission, to
keep records related to the event, and, in certain instances, to disseminate information regarding
such SCI events. In addition, Rule 1003 requires SCI entities to, among other things, “[w]ithin
30 calendar days after the end of each calendar quarter, submit to the Commission a report
describing completed, ongoing, and planned material changes to its SCI systems and the security
of indirect SCI systems, during the prior, current, and subsequent calendar quarters, including the
dates or expected dates of commencement and completion.”52
b.

Analysis and Request for Relief

When it adopted Reg SCI, the Commission acknowledged that applying it to
experimental or trial systems would not always be workable, and would “have the effect of
deterring SCI entities from fully utilizing the testing and development process to test new
systems and system changes and develop solutions to issues prior to implementation.”53 In fact,
the Commission originally proposed that the definition of “SCI system” would include
development and testing systems, but amended the definition in the final rule to exclude such
systems for this reason.54
DTC does not believe the Preliminary Base Version of the DTCC Tokenization Services,
if developed and operated consistently with the representations and limitations described above,
should be considered an SCI System of DTC. Consequently, DTC is requesting that the Division
52

17 C.F.R. § 240.1003(a)(1).
Reg SCI Adopting Release at 72274. See also Letter from Janet McGinness, EVP & Corporate Secretary,
NYSE Euronext to Elizabeth Murphy, Secretary, Commission, dated July 9, 2013 at 11; Letter from Marcia E.
Asquith, Senior Vice President and Corporate Secretary, FINRA to Elizabeth Murphy, Secretary, Commission,
dated July 8, 2013 at 10–11; Letter from Norman M. Reed, Omgeo LLC, New York, New York to Elizabeth
Murphy, Secretary, Commission, dated July 8, 2013 at 5; Letter from Larry E. Thompson, Managing Director and
General Counsel, The Depository Trust Clearing Corporation to Elizabeth Murphy, Secretary, Commission, dated
July 8, 2013 at 4; Letter from Timothy J. Mahoney, CEO, BIDS Trading, L.P., New York, New York to Elizabeth
Murphy, Secretary, Commission, dated July 8, 2013 at 16; Letter from Jay M. Goldstone, Chairman, Municipal
Securities Rulemaking Board, Alexandria, Virginia to Elizabeth Murphy, Secretary, Commission, dated June 28,
2013 at 7–8; Letter from Raymond Tamayo, Chief Information Officer, Options Clearing Corporation to Elizabeth
Murphy, Secretary, Commission, dated July 8, 2013 at 5; Letter from Joseph Adamczyk, Executive Director,
Associate General Counsel, CME Group Inc. to Elizabeth Murphy, Secretary, Commission, dated July 8, 2013 at 6;
Letter from Eric Swanson, SVP, General Counsel and Secretary, BATS Global Markets, Inc., et al. to Elizabeth
Murphy, Secretary, Commission, dated July 30, 2013 at 5; and Letter from William O’Brien, Chief Executive
Officer, Direct Edge Holdings to Elizabeth M. Murphy, Secretary, Commission, dated September 25, 2013 at 2.
54
Reg SCI Adopting Release at 72274.
53

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Jeffrey Mooney
December 11, 2025
staff assure DTC that it would not recommend enforcement action to the Commission for
violations of Reg SCI if DTC develops and operates the Preliminary Base Version in a manner
consistent with the representations provided in this request and does not treat the Preliminary
Base Version as subject to Reg SCI. Moreover, providing relief from Reg SCI for the
Preliminary Base Version is necessary for the reasons the Commission identified. In order to
develop and operate the Preliminary Base Version, DTC would need to fine-tune its systems
promptly in response to feedback, technological developments, and actual experience. This
would necessarily involve changes to the relevant code, procedures, software, systems,
providers, processes and more. DTC would not be able to make these changes if it were required
to go through a lengthy process of confirming the consistency of each and every adjustment with
Reg SCI’s comprehensive standards and, when necessary, preparing a report to the Commission
or disseminating information. Furthermore, given the rapidly changing technological landscape,
it would be unworkable, if not impossible, for DTC to assess what “current SCI standards” are in
the context of some of the systems that DTC anticipates using for the Preliminary Base Version.
Moreover, it is possible that a literal interpretation of Reg SCI may view public
blockchains as SCI systems. In such instance, it would be infeasible to subject the blockchains to
Reg SCI’s requirements. The requirements, which include stress tests, as well as business
continuity and disaster recovery plans, presume that SCI systems used by an SCI entity are
operated by, or on behalf of, an SCI entity with some degree of control over the SCI system. No
one, including DTC, would control any public blockchain used as part of the DTCC
Tokenization Services, and it is unclear how such a blockchain could even be subject to stress
tests or business continuity and disaster recovery plans. Therefore, while DTC envisions
ultimately complying with Reg SCI in relation to the DTCC Tokenization Services once the
Commission has clarified or refined its application to DLT, it would currently be impossible to
do so.
DTC believes that relief from treating the development and operation of the Preliminary
Base Version of the DTCC Tokenization Services as subject to Reg SCI is also appropriate for a
number of reasons. First, the Preliminary Base Version would be far from “central to the
functioning” of the U.S. securities markets or DTC’s services in any meaningful sense. As noted
above, the Preliminary Base Version would be a limited and entirely voluntary option for
Participants and would have a number of risk and design controls that ensure that neither its
operation nor any sort of disruption or failure would negatively affect DTC’s clearance and
settlement services (or any of the other functions identified in the SCI system definition). Of
particular note, (i) DTC would limit Subject Securities to those with sufficient liquidity so as to
ensure that tokenization does not impact trading activity or the market regarding the Subject
Securities, (ii) DTC would retain override keys so as to be able to address any Conditions
Requiring Reversal, and (iii) DTC would not give Subject Securities any collateral or settlement
value, thereby ensuring that DTC does not depend on them to address a Participant default or to
perform delivery-versus-payment settlements.
Second, the systems that DTC uses in connection with the Preliminary Base Version of
the DTCC Tokenization Services would be limited to those that meet certain robust and objective
Technology Standards designed to ensure their integrity, stability, continuity, and compliance. In
particular, as mentioned above, DTC would only support tokenization protocols and blockchains
that satisfy the Technology Standards. Additionally, as described in Section II.e, above, the new
28

Jeffrey Mooney
December 11, 2025
DTCC systems used in connection with the Preliminary Base Version would maintain a system
rating of Tier 2 within DTCC’s internal rating structure at the time of launch of the Preliminary
Base Version. This means that the systems would have, among other things, the ability to operate
from a primary and a secondary location, a maximum four-hour recovery time objective, a
maximum two minutes of data loss from an outage, and annual out-of-region disaster recovery
and resumption testing. To compare the Tier 2 designation to a Reg SCI designation (i.e., a Tier
1 rating), the material differences are that Tier 1 has a maximum two-hour recovery time
objective, a maximum 30 seconds of data loss, biannual recovery and resumption testing, and an
annual audit. At present, it would likely take DTC several years to enable the new systems to
meet those heightened standards, particularly moving from a four-hour to a two-hour recovery
time objective. Such a move is not a linear progression as it may require significant changes to
the systems – changes that are not currently known. Moreover, satisfying a Reg SCI standard is
not purely a DTC endeavor, as DTC would need to work closely with the third-party vendors
that support the new systems and Division staff, all of which can take substantial time and would
be premature for this preliminary phase. Regardless of whether the new systems were designated
Tier 1 or Tier 2, DTC’s existing centralized systems would not be exposed to any material
security risks, as the new systems could only instruct the existing systems to deliver Subject
Securities to or from the Digital Omnibus Account or make a cash payment, with all other
interactions being read only.
Third, the Preliminary Base Version of the DTCC Tokenization Services would not
change the ultimate custodian of record for the Subject Securities or the legal framework
governing their ownership. DTC would remain the securities intermediary for the Subject
Securities subject to Article 8 of the UCC. While the Preliminary Base Version would allow
Participants to have DTC use DLT to record their security entitlements, DTC would maintain the
ultimate final record of such entitlements. As a result, in the event of any disruption in any of the
relevant systems DTC uses in connection with the DTCC Tokenization Services, DTC would
have the ability to leverage its Reg SCI-compliant systems to restore continuity.
Fourth, as described above, DTC would provide the Division staff with notification of
Systems Events related to the Preliminary Base Version as described in Section III.b of this
letter. This notification process would provide the Division staff with information similar to that
required by Reg SCI with respect to SCI events, and on a similar timeframe. Consequently, the
Commission would have prompt notice of any Systems Events related to the Preliminary Base
Version and would be kept apprised of ongoing developments in a manner that would ensure
adequate Commission oversight.
*

*

*

29

*

*

Jeffrey Mooney
December 11, 2025
For the reasons described above, DTC respectfully requests that the Division staff grant
the requested no-action relief to permit DTC to develop and operate the Preliminary Base
Version of the DTCC Tokenization Services in a manner consistent with the representations set
forth in this request without requiring DTC to apply the requirements in the Subject Provisions to
the Preliminary Base Version. We appreciate your assistance in this matter.
Sincerely,

Brian Steele
Managing Director, President, Clearing & Securities Services
DTCC

Nadine Chakar
Managing Director, Global Head of DTCC Digital Assets
DTCC
cc:

Jamie Selway
Director
Division of Trading and Markets

30

Jeffrey Mooney
December 11, 2025
Exhibit 1

31

Jeffrey Mooney
December 11, 2025
Exhibit 2

32

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3Ad170059514029ad9. Public record. Not legal advice.