Nasdaq is seeking regulatory approval to trade tokenized securities, a move that could bridge the Wall Street and blockchain.
The proposal, filed with the SEC, would allow stocks and exchange-traded products to be listed in either traditional or tokenized form. If granted, it would be the first time investors could trade blockchain-settled securities on a major American exchange.
How Tokenization Fits into Wall Street
Tokenization is the process of converting financial assets, such as stocks, bonds, or real estate, into digital tokens. These tokens can then be traded on blockchain systems, often promising faster settlement and improved transparency.
Nasdaq argues that tokenization can work within existing frameworks without undermining investor protections.
In its filing, the exchange stressed that tokenized instruments must carry the same rights and privileges as traditional securities. If these conditions are met, tokenized and traditional assets would share the same order book and follow identical execution rules. If not, Nasdaq will treat tokenized assets as distinct instruments with separate trading conditions.
Regulatory Shifts Supporting Change
The proposal comes as the SEC reviews its regulatory stance on cryptocurrencies and tokenized products. Chair Paul Atkins has been leading an effort to simplify crypto-related rules that Wall Street considered too restrictive.
Last week, the SEC listed updates to its rulemaking agenda, signaling possible amendments that would allow crypto trading on national exchanges. This regulatory shift is seen as an opportunity for traditional financial institutions to expand into blockchain-based settlement.
Rising Demand and Global Momentum
Investor appetite for tokenized products is growing worldwide. Proponents say the technology can unlock liquidity, reduce settlement times, and lower transaction costs.
Coinbase, America’s largest cryptocurrency exchange, has already asked the SEC for permission to offer tokenized equities to its customers.
Major banks, including Bank of America and Citi, are considering the launch of tokenized assets, such as stablecoins and other blockchain-based financial products.
Globally, tokenized securities have already begun trading on several European platforms. However, Nasdaq has criticized these systems for offering exposure to U.S. equities without granting investors actual share ownership.
Regulatory Concerns and Safeguards
While enthusiasm is high, regulators remain cautious about potential risks. Some warn that tokenization could add new vulnerabilities if oversight is weak. In July, SEC Commissioner Hester Peirce, known for supporting crypto innovation, clarified that tokenized securities must still adhere to existing securities laws.
Nasdaq aligned its proposal with that view, stressing that any integration of blockchain will occur inside the national market system. The exchange also noted that avoiding regulatory protections is not in the best interests of investors.
Nasdaq’s filing states that tokenized securities must provide the same material rights as traditional securities. This includes voting rights, dividend entitlements, and legal protections.
Without these guarantees, tokenized assets would not be considered equivalent and would trade separately. The approach is designed to ensure tokenization enhances efficiency without weakening investor safeguards.
Timeline for Implementation
If regulators approve the plan, the first tokenized securities could trade in the United States by late 2026.
Nasdaq stated that the rollout depends on the Depository Trust Company, which is developing the necessary clearing infrastructure. Once operational, investors could buy shares that settle directly on the blockchain, without changing how orders are routed or reported.
The development would represent a landmark in modernizing U.S. markets, blending traditional protections with digital innovation.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
