On December 11, 2025, the Depository Trust & Clearing Corporation (DTCC) received a No-Action Letter from the U.S. Securities and Exchange Commission (SEC), authorizing the tokenization of securities assets it holds in custody on a blockchain. This pivotal development, involving assets under custody worth approximately $99 trillion, has been widely interpreted as a major step toward the tokenization of U.S. equities. A critical examination of the regulatory filing, however, reveals a significant nuance: DTCC is tokenizing “security entitlements,” not the underlying shares themselves. This distinction underscores two fundamentally different approaches emerging within the securities tokenization landscape, representing a deeper institutional博弈. **The Indirect Holding System: A Fifty-Year Foundation** To understand this divergence, one must first grasp the counterintuitive reality of the U.S. public markets: investors do not directly “own” the stocks in their brokerage accounts. This stems from the “Paperwork Crisis” of the late 1960s, which overwhelmed the system of physical certificate transfers. The solution was the creation of the Depository Trust Company (DTC), now part of DTCC. Its core mechanism involved immobilizing physical stock certificates and registering them under the name of a nominee, Cede & Co. Today, Cede & Co. holds legal title to the vast majority of publicly traded U.S. stocks. When an investor holds shares, they possess a “security entitlement”—a contractual right to the economic benefits of those shares through a chain of intermediaries (broker, clearing firm, DTCC), not direct property rights. This “indirect holding system” has provided efficiency and stability for decades but permanently interposes intermediaries between investors and their securities. **DTCC’s Path: Upgrading the Pipeline** DTCC’s newly approved initiative is an evolution of this existing framework. The service will tokenize the security entitlements held by its direct Participants (clearing firms and banks). These tokens will circulate on an approved blockchain but will still represent claims on assets legally held by Cede & Co. This is an infrastructure upgrade aimed at enhancing efficiency within the current system, not replacing it. Potential benefits cited by DTCC include improved collateral mobility through near-real-time transfers, simplified reconciliation via a shared ledger, and paving the way for future innovations like dividend distributions in stablecoins. Crucially, DTCC has stated these tokens will not enter the DeFi ecosystem, bypass existing participants, or alter issuer shareholder registries. The core advantages of the centralized system—such as multilateral netting, which drastically reduces settlement flows—are preserved. **The Direct Holding Path: Tokenizing the Asset Itself** Concurrently, a separate, more disruptive path is developing. In September 2025, Galaxy Digital announced it had tokenized its SEC-registered Nasdaq-listed shares on the Solana blockchain in partnership with Superstate, a registered transfer agent. The key difference is that these tokens represent the actual shares, not an entitlement. When tokens are transferred on-chain, Superstate updates the issuer’s official shareholder registry in real-time; Cede & Co. is not involved. This constitutes true “direct holding,” granting investors property rights rather than contractual claims. In December 2025, Securitize announced plans for a fully on-chain, compliant trading service for tokenized stocks, emphasizing that its tokens would be “real, regulated shares” recorded directly on the issuer’s cap table, with potential for 24/7 trading. **Two Visions for the Future** The two paths represent competing institutional logics. The DTCC model advocates incremental improvement, leveraging blockchain to make the existing, intermediary-dependent machine run faster and more transparently. The direct holding model proposes structural change, questioning the necessity of layered intermediaries when blockchain can provide immutable ownership records, potentially granting investors self-custody and direct rights. Each approach involves trade-offs. Direct holding offers autonomy, self-custody, and composability with DeFi but may sacrifice the liquidity aggregation and netting efficiencies of a centralized system, while transferring operational risks (e.g., key loss) to individuals. The indirect holding model retains systemic efficiency and a mature regulatory framework but maintains investor reliance on intermediaries for exercising rights like voting. SEC Commissioner Hester Peirce, in a statement regarding the DTCC no-action letter, indicated regulatory openness to both experiments, suggesting the market will determine which model suits which needs. **Implications for Financial Intermediaries** This divergence forces existing financial players to reassess their roles. Clearing firms and custodians must consider if their services become commoditized in a tokenized DTCC system. Retail brokerages may see their gateway role challenged by direct holding models, pushing them toward higher-value advisory services. Transfer agents, traditionally back-office functions, could become pivotal gatekeepers in direct holding systems. Asset managers must evaluate the impact of composability (e.g., using tokenized stock as DeFi collateral) on traditional business models like margin lending. **Convergence on the Horizon?** Financial infrastructure transformation is gradual. In the near term, the two paths will likely develop in parallel: DTCC’s model enhancing wholesale markets like securities lending, while direct holding grows in niches like crypto-native assets. Long-term, the curves may converge, offering investors a unprecedented choice: the efficiency of the netted, indirect system or the control and direct rights of on-chain ownership. For the first time since the 1970s, an alternative to the mandatory indirect holding system is being constructed.