Nasdaq, the world’s second-largest stock exchange by market value, filed a proposal with the U.S. Securities and Exchange Commission (SEC) on Monday to list tokenized stocks. The request asks regulators to allow securities to trade in either traditional digital form or tokenized form using blockchain technology.
Nasdaq Seeks Definition to Security
The exchange asked for amendments to existing rules, including how a “security” is defined, so that tokenized shares could follow the same trading and reporting system as regular stocks.
“A security may be traded in the Nasdaq Market Center in either traditional form… or tokenized form (a digital representation of ownership and rights which utilizes blockchain technology).”Nasdaq’s filing stated.
The exchange said tokenized assets should be clearly labeled so that firms responsible for clearing and settlement, like the Depository Trust Company, can process them correctly without any confusion.
Nasdaq also noted that tokenized stocks would get the same treatment and trading priority as traditional shares, but only if they give the same rights to investors, such as voting rights.
Why Does This Matter?
According to reports from Bloomberg, Nasdaq’s proposal goes beyond a simple rule change because it touches on the foundations of how stocks are issued and settled.
The company argued that trading tokenized securities should occur “within the context of an interconnected national market system” and not on “siloed trading venues” where investors cannot see best market-wide prices.
“Although tokenization technology presents novel capabilities by which to record evidence of securities ownership and transactions, the trading of tokenized securities can, and it must occur largely as Congress prescribed,” Nasdaq said. The exchange added, “Such trading must occur in regulated markets, namely national securities exchanges, alternative trading systems, and at FINRA regulated broker-dealers.”
Global Competition From EU
Nasdaq also warned about European platforms that claim to offer U.S. tokenized stocks but do not provide investors with actual ownership of company shares. Nasdaq said these platforms only sell digital rights to shares they hold themselves, and that those rights do not include all investor privileges, especially voting rights.
According to Reuters, the proposal comes at a time when crypto rules in the U.S. are becoming easier and global demand for tokenized assets is growing. If approved, Nasdaq said investors could see the first token-settled trades as early as 2026 once the Depository Trust Company finishes its system updates.
The SEC has included possible rule amendments on its agenda, while major banks like Bank of America and Citi are exploring tokenization. Coinbase has also sought permission to offer tokenized equities.
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