Nasdaq Pushes Forward—Tokenized Securities May Be Approved for Trading on Major U.S. Exchanges for the First Time

Nasdaq has submitted a formal request to the U.S. Securities and Exchange Commission to allow tokenized versions of its listed equities and exchange-traded products to trade and settle alongside traditional formats. This initiative marks a significant advancement in integrating blockchain technology into the core infrastructure of U.S. financial markets and could reshape how securities are cleared and settled.

The rule-change proposal, filed this week, outlines Nasdaq’s intention to enable both conventional digital and blockchain-based settlement for securities on its main exchange. This represents the most comprehensive effort by a major exchange to incorporate tokenized clearing within the national market system.

Nasdaq’s filing follows the SEC’s updated rulemaking agenda, which indicates a growing openness to revising regulations that would permit crypto-asset trading on national exchanges and alternative platforms. In the context of a more relaxed regulatory stance under the current administration, Nasdaq’s move is seen as a milestone in the broader institutional shift toward asset tokenization.

Should the SEC approve the proposal, tokenized securities would be eligible for trading on a leading U.S. exchange for the first time. This would reflect increasing demand from institutional investors and highlight tokenization’s potential to improve market liquidity and operational efficiency.

Nasdaq’s framework is designed to complement existing market structures rather than replace them. The exchange maintains that tokenized instruments can function within the protections of the national market system and that exempting them from current regulatory safeguards would not be in investors’ best interests. This position aligns with SEC Commissioner Hester Peirce’s stance that tokenized securities must adhere to established legal standards.

To ensure investor protection, Nasdaq plans to enforce strict requirements, mandating that tokenized assets offer the same rights and privileges as their traditional equivalents. Instruments meeting these criteria would be integrated into the existing order book and follow standard execution rules, while those lacking parity would be treated separately.

Provided the Depository Trust Company updates its systems accordingly, Nasdaq anticipates that investors could purchase securities and settle them in tokenized form without disrupting order routing, price discovery, surveillance, or reporting functions. The exchange projects that token-based settlement could be operational by the end of Q3 2026.

This proposal comes amid evolving regulatory conditions in the U.S. Under SEC Chairman Paul Atkins, efforts are underway to revise crypto-asset regulations that many in the financial sector view as overly restrictive. The SEC’s recent agenda includes potential changes to facilitate digital-asset trading on national platforms, signaling progress toward integrating crypto with traditional finance.

Marcin Kazmierczak, co-founder of RedStone, noted that regulatory support, technological advancements, and growing institutional interest have created favorable conditions for large-scale tokenization.

Despite the momentum, obstacles remain. A May report from the World Economic Forum cited limited liquidity in secondary markets and the absence of global standards as major barriers to adoption. The World Federation of Exchanges has also emphasized the need for prudent regulatory oversight to mitigate systemic risks. Meanwhile, leading financial institutions such as Bank of America and Citigroup have expressed interest in tokenized products, including stablecoins, reflecting the sector’s active engagement with this emerging trend.