SEC Approves Nasdaq Rule to Trade Securities with Tokens, Paving the Way for Blockchain Integration
The US Securities and Exchange Commission (SEC) has approved changes to Nasdaq’s rules that allow certain securities to be traded in the form of tokens, a move that integrates blockchain technology into the traditional stock market infrastructure.
The approval, issued on Wednesday, is part of a broader effort to examine digital representations of regulated assets while maintaining investor protection and market stability.
Under the new framework, eligible securities — including stocks in the Russell 1000 Index and exchange-traded funds (ETFs) that track major benchmarks like the S&P 500 — can be represented and traded as token assets on Nasdaq.
These token versions are fully interchangeable with common shares, sharing the same ticker symbols, CUSIP numbers, and shareholder rights.
Investors holding tokenized securities retain standard protections, including voting rights, equity access, and residual property claims, ensuring compliance with existing securities laws.
The program operates as a pilot program through the Depository Trust Company (DTC), which handles post-trade settlement and tokenization. Market Participants may choose to pay for trades in the form of tokens by using the instructions provided when placing an order.
Earlier this month, Nasdaq partnered with Payward, Kraken’s parent company, to allow trading of tokenized stocks between traditional markets and blockchain networks using Payward’s xStocks platform.
A nod to Bitcoin
This move will not directly affect the price or the Bitcoin network, but it is a nod to the growing comfort of control with blockchain-based assets, which may indirectly increase institutional interest in the digital currency.
By combining securities with tokens in the mainstream markets, it could pave the way for wider adoption of crypto infrastructure and financial products that work with Bitcoin.
If the tokenization requirements are not met, the trade automatically defaults to traditional settlement. Nasdaq has ensured that its core trading infrastructure – including order types, routing strategies, trading sessions, and market data feeds – remains unchanged, ensuring that tokenized securities are fully integrated into existing systems.
Settlements are ongoing on a T+1 basis, aligning token trades with current rates.
Nasdaq emphasized that the tokenized share and its traditional counterpart will trade on the same order book, which is equally important for the execution and management of market data. The monitoring systems will monitor both types of securities using the same basic data, which is accessible to both Nasdaq and FINRA.
The exchange will issue alerts identifying which securities are eligible for token trading and will notify members at least 30 days before launching any token 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 Industrial Exchange Act, which requires exchange regulations to prevent fraud, promote fair trade principles, and remove barriers to a free and open market.
According to this document, securities with tokens should be similar to traditional shares in rights and privileges, limiting the risk of price divergence or investor protection.
The DTC pilot provides a regulated framework for blockchain-based trading without introducing new market risks.
The approval shows the growing momentum towards tokenization of regulated markets. Commercial and infrastructure providers are increasingly exploring blockchain representations of common goods while remaining within the confines of existing law.
Nasdaq indicated that alternative tokenization methods are being discussed and would require separate filings with the SEC.
