The Era of Security Tokenization Has Arrived: The Compliance Framework Behind the NYSE Proposal and Industry Trends

On April 9, 2026, the New York Stock Exchange officially submitted a rule amendment application to the U.S. Securities and Exchange Commission (File No. SR-NYSE-2026-17), proposing to add Rule 7.50, which would allow qualified securities to be traded and settled on the exchange in tokenized form. This marks another key advancement in the tokenization of securities by major U.S. stock exchanges, following the SEC’s approval of similar rule changes by Nasdaq on March 18, 2026.

How Tokenized Securities Will Trade Alongside Traditional Securities on the Same Order Book

According to the proposal, tokenized securities must share the same CUSIP number and trading code as traditional securities, and grant holders identical shareholder rights, in order to be included in the same order book and traded with the same priority. This means that in the order matching system, the tokenized version and the traditional version of the same security will follow identical execution priority rules, with price and time priority principles unaffected by the asset’s form of representation. From a technical perspective, qualified market participants can declare their intent to settle and clear on-chain by using a “tokenization marker” when entering orders. This design does not create a new asset class but adds blockchain as an optional settlement channel within the existing securities framework.

Why the DTC Tokenization Pilot Is the Core Infrastructure for Implementing Tokenized Securities

All discussions around tokenized securities revolve around the Depository Trust Company (DTC), a subsidiary of the Depository Trust & Clearing Corporation (DTCC). DTC is the central securities depository for the U.S. securities market, holding over $100 trillion in securities assets. On December 11, 2025, the SEC’s Division of Trading and Markets issued a no-objection letter to DTC, permitting a three-year tokenization pilot program. DTC’s approach employs a “parallel track” design: in the traditional model, securities ownership records are maintained on DTC’s centralized ledger; in the tokenized model, DTC uses its proprietary “factory system” to mint tokens on a blockchain representing the corresponding shares, with the underlying shares still held by DTC, while tracking each token transfer via LedgerScan to ensure the on-chain records always match internal ledgers. The pilot scope is strictly limited to Russell 1000 index constituents, U.S. Treasuries, and ETFs tracking the S&P 500 and Nasdaq 100—assets with the highest liquidity. The NYSE’s proposal is being advanced within this pilot framework.

Lessons from Nasdaq’s Approval: Industry Leading Experience in Tokenized Securities

On March 18, 2026, the SEC approved Nasdaq’s rule change submission (SR-NASDAQ-2025-072), allowing certain securities to be traded in tokenized form on Nasdaq’s Market Center. Nasdaq’s rule change includes four core elements: first, redefining “security” to clarify that securities can exist in both traditional and tokenized forms and are considered the same security; second, adding a “tokenization marker” for DTC-qualified participants to select tokenized settlement when entering orders; third, maintaining the same order book and execution priority; and fourth, retaining tokenization instructions when routing across venues. These principles are highly aligned with NYSE’s proposal, indicating that both major exchanges are moving toward standardizing security tokenization. Notably, Nasdaq has also partnered with Payward to design a conversion channel enabling tokenized stocks to transfer between regulated markets and on-chain markets. The NYSE has previously announced plans to build a new blockchain-based trading platform aimed at enabling 24/7 trading and real-time settlement of tokenized stocks and ETFs, pending regulatory approval.

How Sharing CUSIP and Equal Rights Principles Will Build a Compliant Regulatory Framework

On January 28, 2026, the SEC’s Divisions of Corporation Finance, Investment Management, and Trading & Markets jointly issued a “Statement on Tokenized Securities,” clarifying the two core classifications of tokenized securities and the scope of federal securities law applicability, marking a shift from “enforcement deterrence” to “rule clarity” in U.S. regulation of tokenized assets. The statement repeatedly emphasizes that “the substance does not change with form”: regardless of how securities are presented, registration, disclosure, and anti-fraud requirements under federal securities law apply uniformly. In the NYSE proposal, tokenized securities must share the same CUSIP number as traditional securities, which constitutes a technical prerequisite for compliance. The CUSIP number is the unique identifier for stocks and registered bonds in the U.S. Sharing the same number means that tokenized securities are legally equivalent to their traditional counterparts, not separate financial instruments. All existing regulatory rules—including short-selling restrictions, risk management, and market surveillance—apply equally to tokenized securities, without the need for parallel markets or significant exemptions.

Potential Impacts of Tokenized Securities on Liquidity, Market Makers, and Market Structure

The entry of tokenized securities into mainstream exchanges could have multi-dimensional effects on market structure. Positively, tokenization supports 24/7 trading and fractional ownership, helping to expand market participation and improve liquidity. However, industry players like Citadel, a prominent market maker, have expressed caution, warning that tokenized securities might drain liquidity from traditional stock markets and create new liquidity pools inaccessible to institutional investors. If the tokenization model continues to grow and impacts the underlying stock markets, market makers, brokers, and investors may operate both on-chain and off-chain assets simultaneously, increasing risks of fragmented liquidity and quote jumps. Additionally, the World Exchange Federation (WFE) issued a public letter in October 2025, raising concerns that adopting blockchain technology in highly mature equity markets could incur costs exceeding benefits, potentially undermining market integrity and causing regulatory fragmentation. These disagreements highlight that the actual market structure effects of tokenized securities remain to be tested in practice.

How the Growth of the RWA Tokenization Market Confirms Accelerating Institutional Capital Inflows

Tokenization of securities is part of a broader wave of real-world asset (RWA) tokenization. Recent data shows that the global tokenized RWA market value has risen to approximately $24.9 billion, nearly quadrupling from last year, with over $18 billion added this year alone. As of early April 2026, the tokenized RWA market size further increased to $27.65 billion, with quarterly growth being particularly notable. The main drivers are tokenized U.S. Treasuries and commodities, which together account for over $16 billion, roughly 58% of total market growth. Regarding holder composition, on-chain RWA holders have surpassed 663k, with approximately 169k on the Ethereum network. The rapid influx of institutional capital indicates a significant increase in demand from traditional financial institutions for blockchain-based asset infrastructure. The NYSE and Nasdaq’s proposals for tokenized securities are institutional responses to this macro trend.

Summary

The NYSE’s submission of a rule amendment for tokenized securities signifies that major U.S. stock exchanges are entering a substantive phase of implementing blockchain technology into their regulatory frameworks. The proposal relies on a three-year DTC tokenization pilot, requiring tokenized securities to share CUSIP numbers, trading codes, and shareholder rights with traditional securities, and to be executed with the same priority on the same order book, with settlement cycles remaining at T+1. The SEC’s January 2026 “Statement on Tokenized Securities” provides clear regulatory guidance for this transition. From a macro perspective, the global tokenized RWA market had reached approximately $27.65 billion in early 2026, driven by continuous institutional inflows and institutional innovation in regulatory frameworks. However, risks such as liquidity fragmentation, market maker competition, and regulatory fragmentation still warrant close monitoring. Whether tokenized securities can truly integrate into traditional financial infrastructure ultimately depends on regulatory approval and market acceptance.

Frequently Asked Questions

Q: What are the core rules of the NYSE’s tokenized securities proposal?

A: The proposal requires tokenized securities to share the same CUSIP number, trading code, and shareholder rights as traditional securities to be traded in the same order book with the same priority. Initially, the scope is limited to Russell 1000 index constituents and ETFs tracking major indices, with settlement cycles remaining T+1, and existing regulations applying equally to tokenized securities.

Q: Do tokenized securities and traditional securities have the same trading priority?

A: Yes. In the order matching system, the tokenized version and the traditional version of the same security follow identical execution priority rules, with price and time priority principles unaffected by the asset’s form.

Q: What is the role of the DTC tokenization pilot?

A: The DTC pilot provides the infrastructure framework for the clearing and settlement of tokenized securities. DTC uses its proprietary “factory system” to mint tokens on a blockchain, representing the underlying shares, while ensuring on-chain records match internal ledgers via LedgerScan. The pilot lasts three years and is limited to Russell 1000 stocks and major index ETFs.

Q: How does the SEC view regulation of tokenized securities?

A: On January 28, 2026, the SEC’s three divisions issued a “Statement on Tokenized Securities,” clarifying that tokenized securities remain fully subject to federal securities laws, emphasizing that “form does not change substance.” The SEC has shifted from enforcement deterrence to rule clarity, providing guidance for market participants.

Q: What potential market impacts could tokenized securities have?

A: Potential positive impacts include 24/7 trading and increased liquidity through fractionalization. Risks involve liquidity shifting away from traditional markets, changes in market maker dynamics, and regulatory fragmentation. The actual market structure effects need to be validated through practice.

Q: How large is the current tokenized RWA market?

A: As of early April 2026, the tokenized RWA market has reached approximately $27.65 billion, with significant growth driven by tokenized U.S. Treasuries and commodities. On-chain RWA holders number over 663k, with about 169,000 on the Ethereum network.