Nasdaq Seeks SEC Approval for Tokenized Trading

In case you thought that blockchain was just for crypto, Nasdaq may want to have a word.

It petitioned the Securities and Exchange Commission Monday for permission to tokenize US securities, including stocks and exchange-traded products. The setup it’s proposing would allow investors to choose how their trades are executed: the traditional way or via a distributed ledger. If they choose the latter, the Depository Trust Corporation would handle the backend work to clear and settle, recording assets on the blockchain.

“We’re already living in a digital world,” Chuck Mack, senior vice president of North American Markets for Nasdaq, said in an announcement. “Stocks and other securities today are represented and recorded through digital means, so tokenization is just a different method of digitally representing an asset.”

Different, But the Same

Whether in traditional or tokenized form, shares would trade with the same order entry, follow the same executive rules and use the same market identification numbers, according to Nasdaq. Tokenized assets would also provide the same shareholder rights as traditional shares, the company said. But the blockchain has efficiencies such as faster settlements and better audit trails, Mack said.

Trading US equities in tokenized form is new and is already happening on some platforms, albeit for non-US investors:

• Robinhood added tokenized access in July to 200 US ETFs and stocks for European clients.
• Kraken began a “phased rollout” of tokenized trading for US stock and ETFs in late June, starting with 60 securities available for eligible non-US clients.

Timing Is Everything: “Frankly, this seems designed to enlist the new SEC Atkins’ team and its crypto-friendly agenda,” said Bill Singer, a veteran Wall Street regulatory lawyer. Pending SEC approval, tokenized trading could begin on the Nasdaq as soon as the third quarter of 2026 — but there will be some obstacles, Singer said. There will almost certainly be debate on several aspects of the proposal, including getting infrastructure ready by that time, developing standards for metadata, piloting smaller asset classes, promoting transparency and liquidity and ensuring tokenized assets are legally recognized across different systems by the SEC, Commodity Futures Trading Commission and the Treasury Department’s Financial Crimes Enforcement Network, he said. Investor advocates may also counter that tokenization is just hype without any actual benefits, he said. “If the pushback and caution gain traction, a system-wide tokenization overhaul is unlikely to happen soon,” he said.