Nasdaq is asking U.S. regulators to approve a rule change that could allow the exchange to list and trade tokenized versions of stocks, marking one of the most ambitious attempts yet to bring blockchain technology into the heart of American equity markets.
In a filing submitted Monday, the world’s second-largest stock exchange requested the Securities and Exchange Commission (SEC) amend existing rules, including the definition of a security, to permit tokenized stocks to be traded under the same execution and documentation requirements as traditional equities.
The proposal would still require a public comment period and SEC approval before any changes could take effect.
SEC Review of Nasdaq Tokenization Plan Could Reshape Equity Trading
Nasdaq outlined in its submission that tokenized shares should carry the same rights and protections as their underlying securities.
The exchange proposed that tokenized assets be clearly labeled so that clearing firms and the Depository Trust Company, which handles settlement, could process orders in the same way they do with conventional stocks.
Tokenized securities, it added, would be prioritized equally with traditional assets when trades are executed.
The move goes beyond a technical adjustment. It addresses fundamental questions about how stocks are issued, defined, and settled.
“The solution, which is detailed in the proposal, is simple, leverages the current infrastructure, and market structure,” Nasdaq Chief Financial Officer Sarah Youngwood said during the Barclays financial services conference.
If approved, the change would bring tokenized shares directly onto regulated U.S. markets, placing blockchain technology at the core of equity trading rather than on the periphery.
That could help answer whether tokenization becomes a standard part of Wall Street’s infrastructure or remains confined to niche crypto platforms.
Nasdaq’s filing comes as U.S. regulators adopt a more open stance toward digital assets.
SEC Chairman Paul Atkins has directed the agency to develop clear rules on when digital assets qualify as securities, while Commissioner Hester Peirce recently said the regulator is willing to work with tokenization firms, provided they disclose the nature of the assets being digitized.
Tokenized securities are digital representations of stocks that can be traded on a blockchain. Advocates argue they could deepen liquidity, support fractional ownership, and extend access to overseas investors.
Tokenization also raises the possibility of near-instant settlement and 24/7 trading, compared with traditional exchanges that close overnight and on holidays.
Financial heavyweights including BlackRock, Franklin Templeton, and KKR have experimented with tokenizing portions of their funds, though often through intermediaries.
Most tokenized shares to date have been issued by third parties rather than the companies themselves, creating legal and regulatory complications. Nasdaq, in its filing, cautioned that issuers should not be deprived of control over how their shares are traded.
Skeptics note that adoption has so far been limited. JPMorgan Chase recently told clients that tokenization of bonds and other assets has yet to gain traction beyond crypto-native firms. Citadel Securities has also urged regulators to proceed cautiously, warning of risks if clear rules are not established.
Despite these concerns, Nasdaq executives say they see an opportunity to “bridge the gap between the digital-asset and traditional-asset worlds.” President Tal Cohen said the challenge is to ensure tokenization evolves with investor protections at its core.
The proposal comes amid growing global demand for tokenized real-world assets, with overseas platforms already offering tokenized versions of U.S. equities and exchange-traded funds to investors abroad.
Approval from the SEC would mark the first major step toward integrating the same technology directly into U.S. markets.
Global Regulators Face Growing Pressure as Tokenized Equities Surge
The World Federation of Exchanges (WFE), representing major stock exchanges worldwide, has urged regulators to tighten oversight of tokenized equities amid concerns over investor protection and market integrity.
In a letter to watchdogs including the SEC, the European Securities and Markets Authority (ESMA), and IOSCO’s Fintech Task Force, the WFE warned that blockchain-based stocks “mimic” equities without conferring shareholder rights or traditional safeguards.
The group called for securities laws to apply to tokenized assets and for clearer frameworks on ownership and custody.
Tokenized equities, which represent company shares via blockchain-based tokens, have grown rapidly this year.
According to RWA.xyz, the market value of tokenized stocks has surged past $465 million, with monthly transfer volumes climbing more than 280% to $287 million. Research from CoinGecko shows the sector has expanded nearly 300% since the start of 2024.
Platforms such as Robinhood, Kraken, and Coinbase are testing new products tied to tokenized securities. In July, Robinhood’s shares rose 26% after launching tokenized equities and expanding into crypto infrastructure.
Meanwhile, Ondo Finance rolled out Ondo Global Markets last week, offering access to over 100 tokenized U.S. stocks and ETFs for international investors.
Japanese conglomerate SBI Holdings and Startale Group also announced plans to build an on-chain trading platform for tokenized stocks and real-world assets, targeting what they estimate could become an $18.9 trillion market by 2033.
While advocates highlight benefits such as 24/7 trading and lower costs, regulators warn of legal and operational risks.
ESMA executive director Natasha Cazenave said tokenized assets still require robust safeguards:“Tokenized securities are still securities.”
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