Nasdaq Seeks SEC Approval to Trade Tokenized Securities

Nasdaq has filed a proposal with the U.S. Securities and Exchange Commission (SEC) to amend its rules, aiming to permit the trading of tokenized securities—financial assets transformed into blockchain-based digital tokens—on its main market. If approved, this initiative would mark the first instance of tokenized securities being traded on a major U.S. stock exchange, integrating blockchain technology into the traditional financial system.

Tokenized securities represent traditional financial instruments, such as stocks or bonds, that have been converted into digital tokens on a blockchain. This process aims to enhance transparency, reduce settlement times, and potentially lower transaction costs. The concept has been gaining traction among financial institutions seeking to modernize trading and settlement processes.

Nasdaq's proposal stipulates that tokenized assets must offer the same material rights as traditional securities to be treated equivalently and traded under the same rules. If these conditions are met, tokenized securities will be integrated into the existing order book and execution priority rules. Conversely, instruments lacking these rights will be treated as distinct and subject to different trading protocols. The exchange anticipates that the first token-settled trades could occur by the third quarter of 2026, pending the readiness of the Depository Trust Company's infrastructure.

This move aligns with the SEC's recent agenda to revamp cryptocurrency regulations and ease certain Wall Street compliance rules. The SEC has been considering proposals to define the offer and sale of digital assets, potentially introducing exemptions and safe harbors. Additionally, the SEC is contemplating allowing crypto assets to be traded on national securities exchanges and alternative trading systems, signaling a significant shift toward integrating blockchain into traditional finance.

Nasdaq's initiative is part of a broader trend among financial institutions exploring tokenization. For instance, in mid-September, Citi Treasury and Trade Solutions announced the creation and piloting of Citi Token Services for cash management and trade finance, utilizing blockchain technology and smart contracts to deliver digital asset solutions for institutional clients.

The integration of tokenized securities into Nasdaq's main market could have several implications:

• Market Efficiency: Blockchain technology may streamline settlement processes, reducing the time and cost associated with traditional methods.

• Regulatory Challenges: Ensuring that tokenized securities comply with existing securities laws will be crucial. The SEC has emphasized that tokenized assets remain subject to the same legal and regulatory obligations as traditional assets.

• Investor Protection: Maintaining the same material rights for tokenized securities as their traditional counterparts is essential to protect investors and ensure market integrity.

While this would be the first instance of tokenized securities being traded on a major U.S. stock exchange, other platforms have explored similar initiatives. For example, in May 2025, cryptocurrency exchange Kraken announced plans to introduce tokenized versions of over 50 stocks and exchange-traded funds (ETFs), including major companies such as Apple, Tesla, and Nvidia, for non-U.S. customers.

This development represents a significant step toward the integration of blockchain technology into mainstream financial markets, with potential benefits and challenges that warrant close examination.