The crypto friendly Clarity Act did not pass in Congress, so the SEC kept going on its own. On September 17, it said that, for five years and under strict rules, some firms may trade U.S. stocks as blockchain tokens. The venues that run those permissioned trading pools will not have to register as exchanges, and the firms that put money into the pools will not have to register as dealers for that activity. It is a supervised try-out so the SEC can watch how on-chain stock trading works before writing lasting rules. This SEC announcement is one of several steps to modernize US security trading, free up billions of dollars in frozen collateral and provides us an opportunity to update our original March 22 publication on the same topic.
Let us explain.
The SEC has not written a single permanent rule for tokenized-securities clearing. It has instead opened several limited, time-boxed paths. Tokenized stocks and bonds remain securities under existing law. What has changed is how registered market infrastructure may record and move those entitlements on a blockchain. For contextual purposes, the SEC used its own authority to allow limited on-chain trading of tokenized stocks. The exemption was not invented last week. Staff and the Commission had been working on it for more than a year under “Project Crypto.” In August 2026 the SEC even delayed an expected action so it would not collide with the Senate vote. After the bill stalled, the order came out.
The basics.
On March 18, 2026, the SEC approved Nasdaq’s rule change allowing certain listed stocks and ETFs to trade in either conventional or tokenized form on the same order book, with the same execution priority, ticker, CUSIP, and shareholder rights. After execution, eligible DTC participants can opt to settle in tokenized form. If tokenized settlement fails, the trade reverts to ordinary DTC settlement. SEC eligibility for tokenization at launch matches the DTC pilot: Russell 1000 names and ETFs tracking benchmarks such as the S&P 500 and Nasdaq-100. This is an opt-in settlement flag inside existing market structure, not a separate crypto listing and not automatic public-market trading 24/7. The main benefit is post-trade speed, flexibility and more efficient record keeping once a security is tokenized, participants can move it, pledge it, or settle delivery-versus-payment on-chain, including outside standard DTC hours, without changing the investor’s legal rights.
There is some industry jargon here.
The institutional clearing path for most US securities, like stocks and treasuries, including tokens representing those securities, runs through DTC (see below). In December 2025, the SEC staff gave DTC a three-year no-action letter to tokenize entitlements in Russell 1000 stocks, major-index ETFs, and U.S. Treasuries for participating banks and broker-dealers. The token represents the exact same legal entitlement already held at DTC. Trades testing those tokens were completed in July 2026; commercial launch of the service is targeted for October 2026. NSCC (see below) still nets and clears the traditional book-entry side.
Hybrid.
The practical picture in 2026 is therefore hybrid: keep DTC and NSCC as the legal core, tokenize the entitlement, let Nasdaq (and later other venues) attach an on-chain settlement choice, and use temporary exemptions while the SEC studies durable rules. A second post-trade rail is Paxos Securities Settlement Company, which received temporary Section 17A clearing-agency registration in May 2026 and can settle eligible trades on its own ledger, generally bilaterally rather than as a full counter clearing party.
What is the problem tokenization is solving in trading US securities?
Tens of billions of equity trade tickets a year and a much smaller number of much larger Treasury tickets are a bookkeeping challenge. The trade itself already works. What is slow, lumpy, and trapped is the security after the trade: a valid legal claim that cannot move or be reused until the next DTC cycle. Tokenization does not change the instrument. A stock remains a stock; a Treasury remains a Treasury. Tokenization is a new wrapper on the last mile, so inventory and collateral can move from A to B without waiting for the batch window. Until that happens, billions of dollars of collateral stay frozen until those trades clear. Tokenizing securities is meant to free that collateral sooner or eliminate parts of the lock-up entirely so a position can settle and be reused in another transaction instead of sitting idle until the next DTC cycle.
Definitions.
The Depository Trust Company (DTC) is the U.S. central securities depository recording who owns which security. DTC is the entity the SEC allowed to tokenize entitlements and move those tokens on approved chains.
NSCC is the National Securities Clearing Corporation and is the main central counterparty (CCP) for U.S. equities and many other securities. After a stock trade happens on Nasdaq, NYSE, or another venue, NSCC typically steps in between buyer and seller: it nets obligations across the market and guarantees settlement if a member defaults. That is the “clearing” step. NSCC calculates who owes what; DTC moves the positions.
In the tokenized-securities path discussed earlier, NSCC still does traditional netting and guarantee for book-entry trades. Paxos is a separate, newly registered clearing agency, not a replacement for NSCC.
