- Nasdaq received formal approval from the U.S. SEC to begin trading tokenized versions of stocks and ETFs.
- Initial launch will cover Russell 1000 stocks and some index ETFs, with tokenized shares matching traditional ones in rights and trading priority.
- Trades will still flow through the traditional Depository Trust Company and will revert to standard settlement if tokenization fails.
- The approval follows significant industry debate, with commenters raising concerns about mechanics, market risks, and issuer control.
The U.S. Securities and Exchange Commission formally approved Nasdaq‘s proposal to trade tokenized stocks and ETFs on Wednesday, marking a significant but structured step toward blockchain-integrated traditional markets. This plan covers securities already listed, starting with Russell 1000 stocks and certain index ETFs.
Tokenized shares must carry the same rights, symbols, and trading priority as their traditional counterparts. However, the trades will still be processed through the existing Depository Trust Company infrastructure rather than a new on-chain venue. Consequently, if a broker or security is ineligible, the trade settles in traditional form.
Nasdaq originally filed its proposal last September, comparing tokenization to past innovations like decimalization. During the review, several commenters raised questions about the model’s mechanics and risks. For instance, industry groups questioned the lack of clarity around DTC’s role and potential legal uncertainty.
The approval is significant because it begins to make listed equities more programmable, according to Clearpool COO Steven Wu. “The SEC is opening the door for these assets to move beyond trading and into broader financial use cases,” he told Decrypt. This creates flexibility without disrupting current market function.
For institutions, the nod introduces more asset-level flexibility, according to Talos‘ Samar Sen. Market participants will now watch how tokenized securities integrate into post-trade infrastructure and whether consistent liquidity develops. This move signals a more coordinated regulatory approach to asset tokenization within the established financial system.
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