- SEC approves Nasdaq’s tokenized securities trading framework
- Blockchain-based shares will trade alongside traditional equities
- Same ticker, price, and investor rights maintained
- DTC to handle clearing and settlement in pilot program
- Tokenization trend gains momentum across major exchanges
SEC Clears Nasdaq’s Tokenization Proposal
The U.S. Securities and Exchange Commission (SEC) has approved a proposal by Nasdaq to enable the trading of tokenized securities, marking a significant step toward integrating blockchain technology into the U.S. equity markets.
The approval allows Nasdaq to introduce a framework where select securities can be represented and settled as blockchain-based tokens while continuing to trade alongside traditional shares.
How Tokenized Trading Will Work
Under the approved structure, eligible Nasdaq participants will have the option to settle trades using blockchain-based tokens instead of conventional book-entry systems.
These tokenized shares will:
- Trade on the same order books as traditional equities
- Maintain identical tickers and CUSIP identifiers
- Reflect the same pricing and investor rights
- Follow existing regulatory and market rules
This ensures that tokenized and traditional shares remain fully interchangeable from an investor perspective.
Role of Clearing and Settlement Infrastructure
The initiative is tied to a pilot program led by the Depository Trust Company (DTC), which will oversee the clearing and settlement of tokenized transactions. Nasdaq originally filed for regulatory approval in September, aiming to explore how blockchain infrastructure could enhance efficiency without disrupting current market systems.
SEC Emphasizes Investor Protection: The SEC stated that the proposed structure meets its investor protection standards. Key safeguards such as market surveillance, transaction reporting, and settlement timelines will remain unchanged under the tokenized framework. This approach reflects a cautious regulatory stance, ensuring innovation does not compromise market integrity.
Growing Momentum for Tokenized Assets
The approval comes amid increasing interest in tokenizing traditional financial assets, including stocks, bonds, and funds. Tokenization is seen as a way to enable faster settlement and potentially support around-the-clock trading.
Major industry players are actively exploring this space. Nasdaq has indicated plans to develop systems that allow publicly listed companies to issue blockchain-based versions of their shares. It has also partnered with crypto exchange Kraken to expand global access to tokenized equities. Meanwhile, Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, has also been advancing its digital asset strategy, including investments tied to tokenized financial products.
The SEC’s approval signals a growing willingness to integrate blockchain technology within traditional financial infrastructure. While still in a pilot phase, Nasdaq’s initiative could serve as a model for broader adoption of tokenized securities across global markets. Paul Atkins recently introduced a token taxonomy framework to bring clearer classification to digital assets under the U.S. Securities and Exchange Commission.
