SEC Approves Nasdaq Plan for Tokenized Stock Trading

The U.S. Securities and Exchange Commission (SEC) has officially approved a proposal by Nasdaq to allow trading of certain stocks in tokenized form.

Under this plan, Nasdaq will begin with stocks listed in the Russell 1000 along with selected index ETFs. These tokenized shares will carry the same rights, symbols, and trading priority as traditional shares.

Tokenization means converting a traditional asset like a stock or ETF into a digital version on a blockchain, while still being linked to the original security.

Despite this digital shift, trading and settlement will continue through the existing financial system. When brokers place trades, they can choose tokenized settlement. After execution, Nasdaq will send the request to the Depository Trust Company (DTC), which handles clearing and settlement.

If tokenized settlement is not possible due to technical or eligibility issues, the transaction will be completed through the normal settlement process.

Nasdaq first submitted this proposal in September, comparing tokenization to past innovations like electronic trading. The company stated that current regulations already apply to tokenized securities, regardless of the technology used.

However, the proposal faced mixed reactions. Industry groups like SIFMA and Cboe Global Markets raised concerns about the role of clearing systems like DTC. The Digital Chamber called for more flexibility for issuers, while Better Markets opposed the move, citing risks such as pricing gaps and regulatory uncertainty.

The SEC clarified that tokenized assets are still considered securities under the law, meaning blockchain technology does not change their legal status.

Experts believe this approval is a major step toward modernizing financial markets. Tokenized equities could enable faster settlements and eventually support real-time or even 24/7 trading in the future.

For now, the SEC has limited the model to operate within existing systems, but the decision signals a gradual shift toward more advanced and flexible market infrastructure.