Traditional financial markets are moving swiftly toward on-chain infrastructure, as U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins emphasized the potential of an “innovation exemption” to accelerate tokenization.
“U.S. financial markets are poised to move on-chain,” Atkins wrote in a Friday post on X, adding that the SEC is “embracing new technologies to enable this on-chain future.”
His remarks follow the SEC’s recent issuance of a “no-action” letter to a subsidiary of the Depository Trust and Clearing Corporation (DTCC), allowing it to launch a securities market tokenization service.
The DTCC plans to tokenize assets including the Russell 1000 index, exchange-traded funds tracking major indexes, and U.S. Treasury bills and bonds. Atkins described the initiative as “an important step towards on-chain capital markets.”
“On-chain markets will bring greater predictability, transparency, and efficiency for investors,” he said.
Atkins noted that the DTCC pilot is just the beginning. The SEC is also considering an innovation exemption that would allow market participants to begin “transitioning our markets on-chain” without being encumbered by “cumbersome regulatory requirements.”
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SEC Encourages On-Chain Innovation as DTCC Tokenization Pilot Moves Forward
SEC Chair Paul Atkins has pledged to support innovation as the industry transitions toward on-chain settlement, which would enable transactions to settle on blockchain ledgers, reduce reliance on intermediaries, allow 24/7 trading, and accelerate finality. Cointelegraph has reached out to the SEC for comment on the timeline and details 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 recent no-action letter means the agency will not take enforcement action if the DTCC’s tokenization product operates as described. As one of the most critical infrastructure providers for U.S. securities, the DTCC offers clearing, settlement, and trading services.
Asset tokenization involves minting tangible assets on a blockchain ledger, increasing investor access through fractionalized shares and enabling continuous trading.
DTCC Pilot and RWA Builders Accelerate TradFi On-Chain
Crypto analysts have welcomed the SEC’s approval of the DTCC pilot, noting that tokenized assets will carry the same entitlements and investor protections as traditional securities.
“Not sure people fully appreciate how quickly financial markets are heading toward full tokenization… Moving even faster than I expected,” ETF analyst Nate Geraci wrote on X Friday.
In recent months, the SEC has issued two other no-action letters: one for a Solana-based decentralized physical infrastructure network (DePIN) project, and another in September allowing investment advisers to use state trust companies as crypto custodians.
Meanwhile, crypto projects continue raising capital to build the infrastructure required for tokenized, on-chain markets. On Tuesday, asset tokenization network Real Finance closed a $29 million private funding round to develop a real-world asset (RWA) infrastructure layer aimed at increasing institutional participation.
