Nasdaq Files With SEC to Launch Tokenized Securities Trading

Nasdaq has taken a big step to modernise financial markets. 

Recognising the potential of blockchain and similar technologies, Nasdaq has announced that it has filed with the U.S. SEC to allow trading of tokenized securities on the Nasdaq stock market.

The goal is to use blockchain in a way that helps investors, companies, and markets grow safely.

Nasdaq Seeks Rule Changes

The proposed rule change would let member firms and investors trade tokenized versions of stocks and ETPs on Nasdaq. 

Nasdaq has specifically asked the SEC to update certain rules, like the definition of a security, so that it can tokenize stocks and list them on its platform.

It also said that tokenized securities must have the same rights and benefits as regular shares. If they do, they can trade alongside traditional securities on the same order book with the same priority. It will treat tokenized securities as separate from traditional shares if they don’t provide the same rights and benefits.

Clear labeling for Tokenised Assets

Nasdaq wants tokenized assets to be clearly labeled, to ensure smooth processing by all market participants. Under the plan, a security could trade in either traditional form, which is a digital record without blockchain, or in tokenized form, which uses blockchain to represent ownership and rights.

“The Exchange believes the markets can use tokenization while continuing to provide the benefits and protections of the national market system,” it said. 

Tokenized Securities Must Trade on Regulated Markets

Nasdaq also stressed that tokenized securities should be traded “in regulated markets, namely national securities exchanges, alternative trading systems, and at FINRA regulated broker-dealers.” 

It also referred to SEC Commissioner Hester Peirce’s earlier comments that tokenized securities are still securities and that market participants must follow federal securities laws when trading them and said that “It is within this context that Nasdaq offers its proposal to trade tokenized securities.”

The first tokenised trades could launch as early as 2026.

Nasdaq Warns On EU Tokenized Shares

Nasdaq also warned that in Europe, some platforms offering “tokenized U.S. equities” may mislead investors. Instead of giving them real shares, these platforms only provide digital rights tied to shares they hold themselves. Investors don’t get the full ownership benefits like voting or asset claims. 

What’s Next?

Nasdaq’s SEC filing will be open for public comment. Meanwhile, Nasdaq will work with clients and stakeholders to share ideas and gather feedback on how to advance the industry.

Atkins has previously said that “Tokenization is an innovation” and the SEC’s role is to find ways to support and grow innovation in the markets. He also launched Project Crypto to modernize rules and enable America’s financial markets to operate on-chain.