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SEC Chair Advocates for Onchain Financial Markets Through Tokenization
Summary:
The SEC is accelerating the move toward tokenized financial markets, with Chair Paul Atkins endorsing an “innovation exemption” to reduce regulatory burdens. The DTCC received SEC approval to launch a tokenization service for major assets like the Russell 1000 index and Treasury bonds. This signals a shift toward blockchain-based settlement systems that promise greater efficiency, transparency, and 24/7 trading capabilities for traditional markets.
What This Means for You:
- Increased Market Access: Tokenization enables fractional ownership of previously illiquid assets like bonds and index funds.
- Faster Settlement: Blockchain-based clearing could reduce settlement times from days to minutes.
- Regulatory Evolution: The SEC’s innovation exemption may create new opportunities for DeFi builders.
- Warning: Early-stage infrastructure means volatility – proceed with caution in tokenized markets.
Original Post:
Traditional financial markets are moving rapidly onchain as the US Securities and Exchange Commission chair doubled down on the idea of an “innovation exemption” to accelerate tokenization.
“U.S. financial markets are poised to move on-chain,” wrote Paul Atkins, chair of the SEC, in a Friday X post, adding that the agency is “embracing new technologies to enable this onchain future.”
His comments come shortly after the SEC issued a “no action” letter to a subsidiary of the Depository Trust and Clearing Corporation (DTCC), enabling it to offer a new securities market tokenization service.
The DTCC plans to tokenize assets, including the Russell 1000 index, exchange-traded funds tracking major indexes and US Treasury bills and bonds, which Atkins called an “important step towards onchain capital markets.”
“On-chain markets will bring greater predictability, transparency, and efficiency for investors,” he said.
However, the green light for the DTCC’s pilot is only the beginning, as the SEC will consider an innovation exemption to enable builders to start “transitioning our markets onchain,” without being burdened by “cumbersome regulatory requirements,” added Atkins.
Atkins pledged to encourage innovation as the industry moves toward onchain settlement, which would mean settling transactions on a blockchain ledger, removing intermediaries, enabling 24/7 trading and faster transaction finality.
Related: Crypto nears its ‘Netscape moment’ as industry approaches inflection point
Cointelegraph has contacted the SEC for comment on the details and timeline of an innovation exemption for tokenization.
Atkins first proposed an innovation exemption for tokenization during his remarks at the Crypto Task Force Roundtable on DeFi on June 9.
The SEC’s no-action letter means that the agency won’t take enforcement action if the DTCC’s product operates as described. The DTCC provides clearing, settlements and trading services as one of the most important infrastructure providers for US securities.
Asset tokenization involves minting tangible assets on the blockchain ledger, offering more investor access through fractionalized shares and 24/7 trading opportunities.
Related: Bitcoin treasuries stall in Q4, but largest holders keep stacking sats
DTCC pilot and RWA builders push more TradFi onchain
Crypto analysts have praised the SEC’s move to allow the DTCC’s new market tokenization service, which will award tokenized assets the same entitlements and investor protection mechanisms as traditional assets.
“Not sure people fully appreciate how quickly financial markets are heading towards full tokenization… Moving even faster than I expected,” wrote ETF analyst Nate Geraci, in a Friday X post.
Over the past few months, the SEC issued two no-action letters: one for a Solana-based decentralized physical infrastructure network (DePIN) project, and a second no-action letter in September that allowed investment advisers to use state trust companies as crypto custodians.
Meanwhile, crypto projects continue to raise funds to build the infrastructure necessary for tokenized onchain markets.
On Tuesday, asset tokenization network Real Finance closed a $29 million private funding round to build an infrastructure layer for real-world assets (RWAs) that can boost institutional participation.
Magazine: SEC’s U-turn on crypto leaves key questions unanswered
Extra Information:
DTCC Official Site – The clearinghouse at the center of tokenization efforts
SEC Website – Regulatory updates on digital assets
Tokenization Guide – Educational resource on asset tokenization
People Also Ask About:
- What is asset tokenization? The process of representing real-world assets as digital tokens on a blockchain.
- How does tokenization benefit investors? Enables fractional ownership, 24/7 trading, and reduced settlement times.
- What assets can be tokenized? Currently indexes, ETFs, and bonds; potentially any asset class in future.
- Is tokenization regulated? Emerging regulatory framework with SEC no-action letters providing initial guidance.
Expert Opinion:
“The DTCC’s entry into tokenization marks a watershed moment for institutional adoption of blockchain technology. While early implementations will focus on back-office efficiency, the long-term implications include fundamentally restructuring how capital markets operate – from issuance to settlement.” – Blockchain Capital Markets Analyst
Key Terms:
- SEC innovation exemption tokenization
- DTCC blockchain settlement system
- Russell 1000 index tokenization
- Onchain capital markets infrastructure
- Real World Assets (RWA) tokenization
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