SEC Approves Nasdaq Rule to Trade Tokenized Securities, Paving Way for Blockchain Integration
The U.S. Securities and Exchange Commission (SEC) has approved a Nasdaq rule change that allows certain securities to be traded in tokenized form, a move that integrates blockchain technology into traditional stock market infrastructure.
Settlement continues on a T+1 basis, aligning tokenized trading with current standards.
Nasdaq emphasized that a tokenized share and its traditional counterpart will trade on the same order book, with identical execution priority and market data treatment. Surveillance systems will monitor both forms of the security using the same underlying data, accessible to both Nasdaq and FINRA.
The exchange will issue alerts identifying which securities are eligible for tokenized trading and will notify members at least 30 days before launching any tokenized instruments.
The SEC, in its approval, said the proposal meets regulatory requirements designed to protect investors and maintain fair and orderly markets.
The Commission specifically cited Section 6(b)(5) of the Securities Exchange Act, which requires exchange rules to prevent fraud, promote equitable trading principles, and remove impediments to a free and open market.
According to the document, tokenized securities must mirror traditional shares in rights and privileges, limiting the risk of divergence in value or investor protections.
The DTC pilot provides a controlled framework for blockchain-based trading without introducing new market risks.
The approval reflects growing momentum toward tokenization in regulated markets. Exchanges and infrastructure providers are increasingly exploring blockchain representations of conventional assets while remaining within the bounds of existing law.
Nasdaq has indicated that alternative tokenization methods are under discussion and would require separate filings with the SEC.
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