The SEC's "two-year chain" prophecy: A fundamental change in the US financial system

SEC Chairman Paul Atkins recently made a noteworthy prediction: within the next two years, the entire U.S. financial market—including stocks, bonds, real estate assets, and credit instruments—will transition to a blockchain-based platform supporting digital assets. This is a prophecy of an unprecedented structural transformation, comparable to the advent of electronic trading in the 1970s.

DTCC and its subsidiary DTC will become the central hubs of this process. By connecting the traditional CUSIP system with new tokenization infrastructure, DTCC will reshape the entire operation of the U.S. capital markets. This prophecy is not just a vision but a concrete roadmap already underway.

From Prophecy to Action: An Industry-Wide Collaboration Framework

The “Project Crypto” initiative led by the SEC is not a unilateral move but the result of coordinated efforts among legislators, regulators, and the private sector. To bring the over $50 trillion U.S. financial market onto the blockchain, clarity is needed regarding the roles and contributions of each entity.

Government Agencies Define Regulations

The GENIUS Act addresses liquidity issues by creating stablecoins with fully backed real reserves. This shifts control to banking regulators, solving cash payment and collateral needs on-chain.

The CLARITY Act clearly delineates authority between the SEC and CFTC, specifying which agency oversees digital assets like Bitcoin. This helps traditional financial institutions understand the legal framework they must follow and paves the way for blockchain platforms to register as official federal intermediaries.

OCC and CFTC also play vital roles. With over 50 years of experience in clearing and settlement, OCC ensures market stability and integrity. CFTC oversees futures markets and related brokers. This cross-sector collaboration provides a solid foundation for major firms like BlackRock, JPMorgan, and core infrastructures like DTCC to scale up.

Major U.S. Financial Players Accelerate Tokenization

In the map of collaborations among the world’s largest financial institutions, each entity has a clear strategic role and specific technical focus.

BlackRock leads—issuing tokenized U.S. Treasury funds on Ethereum, a public blockchain. This move establishes the role of traditional asset managers within the public blockchain ecosystem, creating a bridge between conventional finance and DeFi.

JPMorgan has rebranded its blockchain division as Kinexys. Through this platform, the bank enables atomic swaps—tokenized collateral and cash exchanged simultaneously within hours instead of days. This greatly optimizes liquidity management. Notably, JPMD’s test on the Base chain is seen as a strategic step toward expanding into larger public blockchains, seeking stronger interoperability.

DTCC, via its subsidiary DTC, has achieved a major breakthrough. As the world’s most critical transaction infrastructure provider, DTC received an no-objection letter from the SEC in December 2025. This allows them to connect traditional CUSIP systems with new tokenization infrastructure, beginning large-scale asset tokenization trials, including components of Russell 1000 stocks.

Rebuilding the Financial System: Benefits and Challenges

The core goal of asset tokenization is to overcome fundamental limitations of traditional finance—time and geographic constraints—to build a global, programmable, 24/7 operational financial system.

Efficiency, Speed, Transparency: Turning the Prophecy into Reality

Payment speeds leap from T+1/T+2 to T+0

Blockchain can enable near real-time (T+0) payments or even second-level settlements—markedly different from the T+1 or T+2 cycles typical in traditional markets. UBS has issued digital bonds with T+0 settlement on SDX, while the European Investment Bank has shortened digital bond settlement from five days to one.

Immediate benefits include significantly reduced counterparty credit and operational risks caused by settlement delays. For time-sensitive transactions like repos and derivatives margining, faster settlement is crucial.

Unlocking “Dormant” Capital via Atomic Swaps

Through atomic swaps, assets and payments occur simultaneously in a single indivisible transaction—eliminating the principal risk of the traditional “deliver first, pay later” model. Simultaneously, tokenization releases “locked” capital waiting for lengthy settlement processes. For example, collateral management alone could programmatically free over $100 billion annually.

Enhanced Transparency and Auditability with Distributed Ledgers

Blockchain ledgers provide a unique, immutable record of ownership, with all transaction history publicly verifiable. Smart contracts automatically enforce compliance and automate corporate actions like dividends. This addresses the “data reversal” and double-entry issues endemic to traditional finance.

Regulators will gain unprecedented “god-like” oversight: real-time, continuous monitoring and effective systemic risk control.

A 24/7/365 Global Market

Tokenization breaks down banking hours, time zones, and holiday restrictions. Cross-border transactions become seamless, with assets transferable peer-to-peer globally at any time. This is especially beneficial for multinational corporations managing cash flows.

Significant Challenges Ahead

Balancing Speed and Efficiency

Currently, DTCC performs net settlement, reducing the actual transfer of cash and securities by 98%, achieving capital efficiency. However, atomic settlement (T+0) is inherently real-time gross settlement, which could negate the benefits of netting. The market must find a balanced solution—such as intraday repos.

Privacy Dilemmas in Institutional Finance

Institutional finance relies heavily on transaction confidentiality, while public chains like Ethereum are fully transparent. Large transactions on public chains risk front-running. Solutions include privacy-preserving technologies like zero-knowledge proofs or operating on permissioned chains like JPMorgan’s Kinexys.

Amplifying Systemic Risks

A 24/7 market eliminates the “cooling-off” periods of traditional markets. Automated trading and margin calls via smart contracts could trigger cascading liquidations under market stress, similar to the 2022 UK LDI crisis. Systemic risk could be amplified instantaneously.

Tokenized Money Market Funds (TMMF): The Perfect Collateral Asset?

Tokenized money market funds (TMMF) exemplify the growth of real collateral assets. TMMFs are attractive as collateral for three main reasons:

Capital Preservation: Unlike cash, TMMFs continue to generate returns until actually used, reducing opportunity costs associated with collateral.

Instant Liquidity 24/7: Combining the stability and regulation of traditional money market funds with blockchain’s instant settlement, TMMFs like BlackRock’s BUIDL allow instant redemption via USDC (Circle’s stablecoin), solving the traditional fund’s T+1 withdrawal delay.

Programmability: Tokenized assets can be embedded with smart contract logic, offering flexibility unavailable with cash.

DTCC—The Central Hub Reshaping the Financial System

DTCC and its subsidiary DTC are indispensable core institutions of U.S. financial infrastructure. To understand their importance, note that DTC manages assets worth $100.3 trillion, including 1.44 million issued securities.

The Revolutionary Role of DTC

DTC handles central securities depository functions, clearing, and other asset services. It controls most registration, transfer, and ownership confirmation processes across the U.S. capital markets.

More than just asset management, DTC acts as a trusted bridge between the traditional CUSIP system (security identification) and emerging tokenization infrastructure. It commits that tokenized assets will retain safety, stability, legal rights, and investor protections.

The Milestone: SEC No-Objection Letter December 2025

In December 2025, DTC received an SEC no-objection letter—an historic milestone. This is not a routine administrative approval but a legal basis for large-scale tokenization activities by DTCC/DTC.

This letter impacts three key areas:

Official Recognition of Tokens

Tokenization by DTC signifies official approval for tokenized U.S. equities from the U.S. government. Future tokenized U.S. stock projects could connect directly to DTC’s official tokenized assets, bypassing the need for independent infrastructure.

Full Market Structure Integration

U.S. stock markets will evolve into a model combining “CEX exchanges + DTC custody/trading”—with Nasdaq and others acting as exchanges, DTC managing token contracts and token withdrawals. Liquidity will be fully on-chain, no longer fragmented.

Enhanced Collateral Liquidity

DTC’s tokenization services will enable 24/7 access and programmable collateral assets. DTCC has nearly a decade of research into distributed ledger technology to optimize collateral management, now approaching realization.

Eliminating Market Fragmentation

Tokenized stocks will no longer be isolated digital assets but fully integrated into the main ledger of the traditional capital market.

The Prophecy Approaching Reality

Paul Atkins’ “two-year on-chain” prophecy is not just a distant vision but a concrete, gradually unfolding roadmap. The collaboration among regulators, major financial institutions, and DTCC has created a legal, technical, and institutional “corridor” for this transformation.

The next two years will be a transitional phase—not complete, but a pivotal turning point in U.S. finance history. The market will shift from an old, film-like sequential system—slow and incremental—to a digital, parallel, instant system. As the central hub of this history, DTCC will serve as the “warehouse” leading the symbiotic transformation of TradFi and DeFi, unprecedented in the financial world.