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Archived memo. Archived 2026-10-18: The memo’s first sentence said Ketju had not reached a verdict on DTC-tokenized securities, but the Register showed Not approved. Ketju found no defect in the design and has not approved the service, which has not launched. Ketju corrected the first sentence, and the verdict did not change. This page keeps the last verdict Ketju issued, and Ketju does not count it in current coverage. Ketju quotes this memo exactly as it issued it on 2026-09-23, so it keeps words Ketju has since retired, such as Rejected, which Ketju now calls Not approved.
Tokenized real-world assets

DTC Tokenization Service (DTC-tokenized stocks, ETFs, and Treasuries)

Not approved No defect found; not on the approved list
Verdict
Not approved
No defect found; not on the approved list
Who can freeze it
Not graded
Withdrawals
Two paths exist.
Reviewed
2026-09-23 · next 2026-12-23
Researched memo

Summary

Ketju has not reached a verdict on DTC-tokenized securities: the service has not launched, and no DTC Participant has published the terms on keys, SIPC and withdrawals under which a client would hold a token. A DTC-tokenized share is the same share, with the same CUSIP, held the way almost every US share is held. It is registered to Cede & Co., DTC’s nominee, and credited to a DTC Participant as a security entitlement under UCC Article 8. Only the ledger changes. That design answers the questions that rule out most tokenized stocks. The holder owns the real share through the normal chain of custody. The SEC staff statement of January 28, 2026 puts this model with third-party custodial security entitlements and cites the DTC letter by name. The same design sets hard limits. Only Participants, in practice brokers and banks, may register wallets, and tokens move only between registered wallets. DTC keeps a root wallet on each chain that can mint, burn, move or convert any token without the holder’s key. DTC settled production trades on July 15, 2026, and DTCC targets an October 2026 launch. As of September 22, 2026 no token contract address, fee schedule or approved-chain list is public. This is the cleanest claim of any tokenized stock we have reviewed, and it gives a client nothing the client lacks today. The research so far supports use with limits after launch: only through a Participant broker, and only once that broker puts its terms on keys, SIPC and withdrawals in writing.

Changes

2026-10-18The memo’s first sentence said Ketju had not reached a verdict on DTC-tokenized securities, but the Register showed Not approved. Ketju found no defect in the design and has not approved the service, which has not launched. Ketju corrected the first sentence, and the verdict did not change. The prior memo

Research

How it works

The service converts a position DTC already holds. A Participant first registers a wallet address on an approved chain, and DTC screens it against OFAC lists. The Participant then sends a Tokenization Instruction. DTC acts on it only if the security is eligible and the move would pass the Collateral Monitor and Net Debit Cap, the two controls DTC uses to survive a Participant default. In DTC’s words, ”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.”

On acceptance, DTC debits the shares from the Participant’s account and credits them to the Digital Omnibus Account, a single account on DTC’s central ledger that holds every tokenized share. DTCC’s Factory system mints a matching token to the Participant’s wallet. Shares in the omnibus account cannot move until the token is burned, which DTC says prevents a double spend: ”DTC would continue to hold one security for each security entitlement.” The shares stay registered to Cede & Co. throughout, and the issuer’s transfer agent sees no change. Only Participants may register wallets, and ”The tokens would only be transferable to Registered Wallets.”

The eligible list is narrow. The staff letter limits it to Russell 1000 stocks at launch plus later additions, even if they leave the index; US Treasury bills, notes and bonds; and ”ETFs that track major indices, such as the S&P 500 index and Nasdaq-100 index.” Not every Participant may join. DTC excluded Participants for which it has US tax withholding or Treasury International Capital reporting duties, ”approximately 11 percent of its Participants” as of October 31, 2025.

What the holder owns

The holder owns a security entitlement against DTC, the same Article 8 interest every Participant holds today. DTC’s request says 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.” Article 8 keeps securities held by an intermediary out of that intermediary’s estate in insolvency (UCC 8-503). DTC’s FAQ says it ”will treat its tokenized securities the same as traditional book-entry securities” for bankruptcy purposes. Dividends and proxies run through DTC as they do today.

DTC’s books, and not the chain, hold the official count. In DTC’s own words, ”The tokens created by DTC are simply extensions of DTC’s books and records.” ”For recording Tokenized Entitlements, LedgerScan’s record would constitute DTC’s official books and records.” LedgerScan is DTCC software in the public cloud that scans each chain and records which registered wallet holds which tokens. When a token moves, LedgerScan records the Participant tied to the receiving wallet as the new entitlement holder. DTC reconciles LedgerScan’s total against the omnibus account and ”maintains administrative rights over its tokens to make such adjustments.”

The end client sits one level further out. ”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.” A client’s claim therefore runs to its broker and sits on the broker’s books, exactly as it does for shares held in street name. The SEC staff statement of January 28, 2026 places this under ”Tokenized Security Entitlement,” the third-party custodial model, and footnote 13 cites the DTC letter. No DTC or SEC document we retrieved states how SIPC treats a tokenized position held in a wallet whose keys the customer controls.

Who controls it

DTC can stop, move or burn a token. Every token must use a protocol DTC has tested for ”distribution control,” meaning it cannot reach an unregistered address, and ”transaction reversibility.” That means DTC can ”force convert or transfer the Token using DTC’s “root wallet” on the blockchain when necessary to address a Condition Requiring Reversal.” DTC names ERC-3643 as one such protocol. The conditions listed are corporate actions, ”erroneous entries, lost tokens, or malfeasance.”

The power is broad. ”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.” DTC says it keeps these keys in cold storage, except those needed for daily work. DTCC’s product page adds pause: ”DTC-issued tokens include controls such as mint, burn, pause and clawback functionality.” The FAQ says DTC ”retains full administrative control over its tokens, including claw-back and force transfer capabilities, if tokens are lost or stolen.”

DTC will also force-convert tokens back to book entry when a corporate action needs it, with advance notice ”to the extent feasible.” Each quarter DTC must report to SEC staff ”Any instances in which DTC used its “root wallet” to address Conditions Requiring Reversal.” Those reports go to staff and the DTCC board; the public does not see them. An advisor should read this as the same control DTC has over any book-entry position, now used on a public chain. On top of it sit whatever freeze powers the Participant keeps over wallets it opens for customers, which DTC does not govern.

Trading and withdrawals

Two paths exist. On-chain, a Participant or its customer can send tokens to another registered wallet at any hour. DTC processes no payment for these moves. They are ”free-of-value, 24/7,” and any delivery-versus-payment ”would occur away from and without any involvement by DTC.” Tokens carry no collateral or settlement value at DTC. To use a position in DTC settlement, the Participant must convert it back first.

On exchange, the SEC approved Nasdaq’s rule on March 18, 2026 (Release 34-105047). A tokenized share trades on the same order book, with the same priority, as the traditional share, but only if it ”shares the same CUSIP number with and trading symbol.” A member flags an order for token delivery, and Nasdaq passes that preference to DTC after the trade. If DTC cannot deliver a token, the trade settles in ordinary form. ”Trades in tokenized securities handled by DTC would continue to settle on a T+1 basis.” Nasdaq’s rule goes into effect only once DTC’s post-trade service exists, and Nasdaq must give members 30 days’ notice. NYSE (filed April 9, 2026), NYSE Texas and NYSE Arca (April 29), NYSE National and NYSE American (May 1), and 24X (June 11) filed copies for immediate effect. DTC’s FAQ says ”At launch, transactions will not be settled in digitized form,” so delivery of tokens from exchange trades may come after launch.

Withdrawal is simple. The Participant tells DTC to de-tokenize. DTC burns the token, debits the omnibus account and credits the shares to the Participant’s ordinary account, and from there the shares sell like any other. DTC can also burn a token on one chain and reissue it on another. No document states how long a de-tokenization takes.

Launch status

DTC ran production trades on July 15, 2026 on ”LFDT’s Besu (DTCC’s private network) and Canton (a public network).” J.P. Morgan tokenized QQQ and posted tokenized collateral to CME, and SPY was also tokenized. DTCC’s release counts ”More than 30 firms” and its live page ”about 40.” The ”50+” figure is the working group announced May 4, 2026. Stellar is planned for the first half of 2027. DTCC last updated its framework for screening blockchains on August 12, 2026.

DTCC says it will launch in October 2026. The staff letter lapses three years after DTC gives notice of launch. The request promised public Technology Standards, an approved-chain list and a fee schedule. As of September 22, 2026 we found the screening framework and three named networks, but no formal list, no fee schedule and no token contract address on any chain. None of the ten DTC rule filings of 2026 on the SEC index concerns tokenization. The staff relief from Rule 19b-4 means none was required.

Canton and Stellar are DefiLlama chain names, so Ketju can track them. DTCC’s Besu network is private and cannot be read from outside. Until DTCC publishes contract identifiers, no one can read supply, freeze or pause state on-chain, and this memo holds no on-chain transfer controls.

Regulation

On September 17, 2026 the Commission exempted Tokenized Securities Venues from the definition of ”exchange” until September 17, 2031 (Release 34-106402). ”Tokenized NMS Stock” covers securities tokenized by the issuer or ”by a third party that is unaffiliated with the issuer,” and excludes synthetic linked securities and security-based swaps. Footnote 3 points to the staff statement’s custodial model, which cites the DTC letter, so DTC-tokenized stocks and ETFs fit the definition. The order does not name DTC.

A token that fits the definition still needs a venue to list it. A venue must send the issuer notice and wait 30 days for objection before listing a third-party token, and must verify ”the same rights and privileges.” Venues face caps: 75 symbols and 0.25 percent of prior-month volume for Tier 1 (S&P 500 and Russell 1000), and 250 symbols and 2.5 percent for Tier 2. DTC tokens can sit only in Participant wallets, so a venue’s liquidity pool could hold them only if DTC registered the pool’s address to a Participant. That is our reading; no document addresses it.

Related actions set the rules an advisor works under. The Division of Trading and Markets said on December 17, 2025 that ”crypto asset securities” include tokenized equity and debt for broker-dealer custody under Rule 15c3-3. The proposed transfer-agent rules of September 1, 2026 would let a transfer agent keep its master file on a chain if it holds ”exclusive control.” The custody rule for advisers is on the SEC agenda for an October 2026 proposal (RIN 3235-AN46). None of these changes the DTC claim. The custody rule may change how an adviser must hold it.

Comparison

The client already owns these shares through the same broker, with the same rights. The token adds round-the-clock transfers between registered wallets and new uses as collateral, mostly for institutions.

Sources

Each claim above comes from one of these sources. Where Ketju could not verify a number, the memo states that.

The asset and the chain

This memo covers the protocol. A position also holds an asset and settles on a chain. Whichever of the three holds the most power over the position decides who can freeze it. These tables describe control and do not judge quality.

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