SEC Opens Door for Tokenized Stocks on Nasdaq – A Major Shift for Wall Street

The U.S. Securities and Exchange Commission (SEC) has approved Nasdaq’s proposal to enable the trading of tokenized securities, marking a major step toward integrating blockchain-based assets into traditional markets. The approval allows select equities and exchange-traded funds (ETFs) to be represented and settled in tokenized form under a controlled pilot program.

Tokenized stocks cleared for trading

According to the SEC order from March 18, Nasdaq can now support “the trading of securities on the Exchange in tokenized form” as part of a pilot tied to the Depository Trust Company (DTC).

The framework allows eligible participants to trade tokenized versions of stocks and ETFs, at the same time maintaining the same core market structure weeks after U.S. Regulators clarified capital rules for tokenized securities. Crucially, tokenized shares will function identically to traditional ones from a trading perspective.

The SEC emphasized that tokenized securities must remain fully equivalent to their traditional counterparts. A tokenized share must be “fungible with, share the same CUSIP number with and trading symbol, and afford its shareholders the same rights and privileges” as the original stock.

That means no difference in ownership rights, voting, or dividends. On Nasdaq, both versions will trade together on the same order book with identical execution priority.

How tokenization works on Nasdaq

Eligible traders can request tokenized settlement by selecting a specific flag when placing orders. After execution, that preference is passed to DTC, which handles whether the trade settles as a token or in traditional form.

If tokenization cannot be completed for any reason, the system defaults back to standard settlement. Importantly, Nasdaq itself does not verify eligibility at order entry. DTC handles the process under its pilot framework.

The SEC made clear that tokenization will not alter how Nasdaq’s market operates.

Order types, routing, fees, and trading sessions remain unchanged. Market data will not distinguish between tokenized and traditional shares, and surveillance systems will treat both identically. 

Trades will also continue to settle on a T+1 basis, meaning transactions are finalized one business day after execution. In practice, if a trade is executed on Monday, ownership and payment are completed on Tuesday. This reflects the current U.S. market standard and indicates that, for now, tokenization does not yet introduce instant settlement within regulated exchanges.

Limited rollout under pilot

The initial rollout integrates exclusively large-cap equities and major ETFs, including securities in the Russell 1000 and index-tracking funds.

The SEC noted the proposal aims to “remove impediments to and perfect the mechanism of a free and open market” as it maintains investor protections.

Though some commenters raised concerns around market structure and risks, the Commission concluded the existing regulatory framework addresses those issues.

The approval signals that tokenization is no longer theoretical on Wall Street, but moving into live market infrastructure under regulatory oversight.

Elsewhere, the SEC issued new guidance clarifying how federal securities laws apply to cryptocurrency assets, released alongside the Commodity Futures Trading Commission (CFTC) with an aim to resolve long-standing uncertainty around how digital assets are classified.