The U.S. Securities and Exchange Commission has approved a rule change that allows Nasdaq to support tokenized versions of certain securities, marking a step toward integrating blockchain infrastructure into regulated equity markets.
The decision, issued Wednesday, clears the way for a controlled pilot that keeps trading and settlement within existing market systems while introducing blockchain-based representations of stocks and exchange-traded funds.
🚨 SEC just approved Nasdaq's rule change to enable tokenized securities trading.
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Tokenized shares mirror traditional securities
Under the approved framework, tokenized securities will carry the same rights and identifiers as traditional shares. These include identical ticker symbols, CUSIP numbers, voting rights, and dividend access.
Eligible assets will include stocks listed in the Russell 1000 Index as well as ETFs tied to major benchmarks such as the S&P 500 and Nasdaq-100. These tokenized instruments will trade on the same order book as their conventional counterparts, with no change in execution priority or pricing.
The SEC stated that the proposal aligns with Section 6(b)(5) of the Securities Exchange Act. The provision requires exchanges to prevent fraud, promote fair trading practices, and maintain orderly markets. The agency concluded that Nasdaq’s structure meets these requirements while preserving investor protections.
Settlement remains within existing infrastructure
The system will operate through a pilot program in coordination with the Depository Trust Company, which will handle post-trade settlement and tokenization processes.
Market participants can indicate a preference for tokenized settlement at the time of order entry. Nasdaq will pass that instruction to the Depository Trust Company after execution. If tokenization conditions are not met, the trade will settle through traditional methods.
Settlement will continue on a T+1 basis. This approach keeps tokenized trading aligned with current timelines rather than introducing real-time settlement.
Nasdaq confirmed that its core infrastructure remains unchanged. Order types, routing systems, and market data feeds will operate as they do for standard securities. Surveillance systems used by Nasdaq and FINRA will monitor both tokenized and non-tokenized trades using the same dataset.
Pilot addresses earlier concerns from industry groups
The proposal received feedback during the review process from several market participants and organizations. Concerns focused on surveillance, potential price divergence, and the role of clearing infrastructure.
Groups such as the Securities Industry and Financial Markets Association and Cboe Global Markets raised questions about how tokenized settlement would function in practice. The Digital Chamber argued for a more flexible approach that does not favor specific technologies. Better Markets opposed the proposal due to concerns about legal clarity and market fragmentation.
The SEC noted that amendments to Nasdaq’s proposal addressed these issues by ensuring that tokenized shares remain fully equivalent to traditional securities. This structure reduces the risk of price gaps between formats and maintains consistent regulatory treatment.
Tokenization gains traction across financial sector
The approval reflects a broader shift toward tokenization within regulated finance. The process converts traditional assets into digital representations on blockchain systems while preserving legal ownership rights.
Nasdaq has already taken steps to expand its role in this space. Earlier this month, the exchange partnered with Payward, the parent company of Kraken, to support tokenized stock trading through the xStocks platform. The collaboration aims to bridge traditional market infrastructure with blockchain-based systems.
Other major players have also entered the space. Intercontinental Exchange, which owns the New York Stock Exchange, has invested in crypto exchange OKX to develop tokenized equity offerings.
The SEC has maintained that tokenized assets remain subject to existing securities laws. Agency staff reiterated in January that placing a stock on a blockchain does not change its legal classification.
Limited scope signals cautious regulatory approach
The structure approved for Nasdaq keeps tokenized trading within traditional rails rather than creating a separate on-chain market. This approach allows regulators to test the model without introducing new systemic risks.
Participation in the pilot will be restricted to eligible market participants. Exchanges will notify members at least 30 days before launching any tokenized instruments and will issue alerts identifying which securities qualify.
The design provides flexibility while maintaining continuity. Trades default to standard settlement if tokenization requirements are not satisfied. This fallback ensures that market operations continue without disruption.
Broader implications for digital assets
The move does not directly affect cryptocurrencies such as Bitcoin, but it reflects growing acceptance of blockchain-based infrastructure within regulated finance.
By allowing tokenized versions of widely traded equities, regulators have created a pathway for further experimentation with digital asset technology in mainstream markets. The pilot also opens the door for additional filings that could expand tokenization methods in the future.
Nasdaq has indicated that alternative approaches remain under discussion and would require separate approval. For now, the pilot represents a controlled step that blends new technology with established systems.
Roman Zaika
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