Nasdaq’s Big Bet On Tokenization Gets Regulatory Green Light From SEC
Nasdaq struck a deal with crypto exchange Kraken earlier this month to let public companies issue their own tokenized shares directly on blockchain networks. Now it has the green light to go further.
Traditional And Tokenized Stocks To Share The Same Order Book
The US Securities and Exchange Commission approved Nasdaq’s proposal Wednesday to allow tokenized versions of stocks and other securities to trade on its exchange alongside their traditional counterparts.
The two versions will share the same order book, the same price, the same ticker, and carry identical shareholder rights.
Nasdaq first filed the proposal in September, partnering with the Depository Trust Company, a key market infrastructure firm, to make it work.
Not everyone can take part. The pilot is limited to “eligible participants” only, who will have the choice of trading either form of a given stock.
The eligible securities are drawn from the Russell 1000 Index — which tracks the 1,000 largest US-listed companies by market capitalization — plus exchange-traded funds that follow the S&P 500 and Nasdaq-100.
The SEC did not rubber-stamp the proposal through without pushback. Concerns were raised about market surveillance and the risk of price gaps opening between the two versions of the same stock.
Nasdaq later filed an amendment spelling out additional safeguards, which appeared to satisfy regulators.
NYSE Owner Also Moving Into Blockchain-Based Trading
Nasdaq is not alone in this push. The Intercontinental Exchange, which owns the New York Stock Exchange, invested in crypto exchange OKX in early March with plans to launch its own tokenized stocks.
The two biggest US exchange operators are now moving in the same direction at roughly the same time.
Tokenization — putting traditional assets on a blockchain — has gained traction among major financial institutions because of its potential to cut settlement times and open the door to longer trading hours.
Until now, most of that activity has stayed in the testing phase. This pilot puts it on a live exchange for the first time under formal regulatory approval.
SEC Chair Paul Atkins said Tuesday the agency plans to seek public comment on a range of crypto-related exemptions, including one that would allow certain securities tied to crypto to raise funds over a 12-month window without registering under standard securities laws.
Nasdaq Greenlight: Broader Policy Shift Backs The MoveThe approval fits a broader shift in how US regulators have approached digital assets since US President Donald Trump returned to the White House.
The SEC under Atkins has moved away from the enforcement-heavy stance of his predecessor and toward building clearer rules for the industry.
For now, the Nasdaq pilot remains controlled and narrow. But if eligible participants adopt the tokenized format in meaningful numbers, it could set the template for how US stock markets operate in the years ahead.
Featured image from Nasdaq, chart from TradingView
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