REGULATION | United States SEC Clears World’s Second Largest Stock Exchange for Tokenized Securities

The U.S. Securities and Exchange Commission has approved a rule change allowing Nasdaq to introduce trading and settlement of tokenized securities marking a major step toward integrating blockchain into traditional capital markets.

The Nasdaq (National Association of Securities Dealers Automated Quotations) is the world’s second-largest stock exchange, founded in 1971 as the first electronic, non-physical trading floor. Known for listing major technology giants like Apple, Microsoft, and Amazon, it features over 4,000–5,000 company listings with a high concentration of tech and growth firms.

The approval, formalized under SEC Release No. 34-105047, authorizes Nasdaq’s proposal (SR-NASDAQ-2025-072) to launch a limited pilot program enabling certain equities and exchange-traded funds to be represented and settled as blockchain-based tokens.

Under the new framework, eligible securities can be traded in either traditional or tokenized form with both versions coexisting seamlessly on the same market infrastructure.

Crucially:

• Tokenized shares will carry identical rights and protections as traditional shares, including voting rights and dividends.
• They will share the same ticker symbol, CUSIP, and order book, ensuring no difference in pricing or execution priority.
• Trades will continue to settle through the existing system operated by the Depository Trust Company, maintaining the standard T+1 settlement cycle.

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Market participants can opt into tokenized settlement on a trade-by-trade basis using a designated “tokenization flag” when placing orders.

The initiative is intentionally narrow in its early phase. The pilot will initially cover:

• Stocks in the Russell 1000 Index
• Select ETFs tracking major benchmarks like the S&P 500 and Nasdaq-100

Not all listed securities will qualify, and the rollout depends on readiness of the underlying tokenization infrastructure. Nasdaq must also provide at least 30 days’ notice before live trading begins.

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A Regulated Path to Tokenization

Unlike crypto-native tokenized stocks offered on offshore platforms, Nasdaq’s approach keeps everything within existing regulatory and market structures. Tokenized securities must be fully fungible with their traditional counterparts and meet all requirements under U.S. securities laws.

This ensures:

• No parallel or unregulated market
• Full oversight by regulators
• Compatibility with institutional custody and clearing systems

The move signals a turning point: tokenization is no longer experimental-it is being embedded directly into the infrastructure of public equity markets.

As major exchanges and financial institutions race to adopt tokenization, this approval positions Nasdaq at the forefront of what could become the next evolution of global capital markets.

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Stay tuned to BitKE on tokenization developments globally.

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