The U.S. Securities and Exchange Commission (SEC) on Wednesday approved Nasdaq’s proposal to allow certain securities to be traded in tokenized form, an important step in integrating blockchain technology into U.S. securities markets.
The Nasdaq tokenization plan is linked to a pilot project led by the Depository Trust Company (DTC), which will manage the clearing and settlement of tokenized transactions. Nasdaq filed for regulatory approval in September,
Under this framework, eligible Nasdaq participants can choose to settle transactions in the form of blockchain-based tokens rather than through standard book-entry systems.
Tokenized stocks will trade alongside traditional stocks on the same order book and at the same price. They will carry identical rights, use the same ticker and the same CUSIP (identification number) and follow existing market rules.
The SEC said the structure met investor protection standards, noting that monitoring, data reporting and settlement deadlines remained intact.
The move comes as the tokenization of traditional assets such as stocks, bonds and funds has become a rapidly growing sector in the digital asset space. The process allows for near-instantaneous, 24-hour trading with tokens tied to real-world assets.
The trend has captivated major US exchanges. Nasdaq said last week that it was developing a framework that would allow publicly traded companies to issue blockchain-based versions of their shares. It has partnered with crypto exchange Kraken to distribute tokenized stocks worldwide. Meanwhile, Intercontinental Exchange (ICE), the owner of the NYSE, has invested in crypto exchange OKX with plans to launch new tokenized stocks and crypto futures.
Read more: Here’s why Nasdaq and the owner of the NYSE are putting the $126 trillion stock market on the blockchain
