The US Securities and Exchange Commission (SEC) on Wednesday approved Nasdaq’s proposal to allow certain securities to be traded as tokens, marking a significant milestone in integrating blockchain technology into US equity markets.
Nasdaq’s tokenization plan is tied to a pilot run by the Depository Trust Company (DTC), which will handle clearing and settlement of token trades. Nasdaq applied for regulatory permission in September,
Under the framework, eligible Nasdaq participants can choose to settle trades in the form of blockchain-based tokens instead of the standard book-entry system.
Tokenized shares will trade on the same order book and at the same price as traditional shares. They will have the same rights, use the same ticker and CUSIP (identification number) and follow existing market rules.
The SEC said the structure met investor protection standards, noting that monitoring, data reporting and settlement timelines remained intact.
The move comes as the tokenization of traditional assets such as stocks, bonds and funds has become a fast-growing area of the digital asset sector. This process allows almost instant, around-the-clock trading with tokens pegged to real-world assets.
This trend has attracted the attention of major US exchanges. Nasdaq said last week it was developing a framework that would allow publicly listed companies to issue blockchain-based versions of their shares. It has teamed up with crypto exchange Kraken to distribute tokenized stocks globally. Meanwhile, NYSE owner Intercontinental Exchange (ICE) invested in crypto exchange OKX with plans to launch new tokenized stocks and crypto futures.
Read more: This is why the owners of Nasdaq and NYSE are putting the $126 trillion equities market on the blockchain