Nasdaq is working with U.S. regulators on plans to launch a tokenized securities trading business. Against the background of the Trump administration's relaxation of cryptocurrency regulations, the tokenization craze continues to heat up, and Nasdaq has become the latest large financial institution on Wall Street to increase investment in the field.
If approved, the plan would mark the first time tokenized securities are allowed to trade on a major U.S. stock exchange and would be the most ambitious attempt by an exchange operator to integrate blockchain settlement into the national market system.
On Monday, Nasdaq submitted a proposal to the U.S. Securities and Exchange Commission (SEC), requesting that its rules be adjusted to allow trading of listed stocks and exchange-traded products on its main market in "traditional digital form or tokenized form."
A few days ago, the U.S. Securities and Exchange Commission just announced its rulemaking agenda, which includes a potential rule revision plan to allow cryptocurrency trading on national stock exchanges and alternative trading systems.
The latest developments come against the backdrop of rising global investor demand for tokenized assets. Proponents of the cryptocurrency industry believe that tokenization can increase liquidity in the financial system.
Coinbase, the largest cryptocurrency exchange in the United States, has also previously applied for a license from the U.S. Securities and Exchange Commission to provide “tokenized stocks” services to customers. Many major global banks, including Bank of America and Citigroup, have stated that they may explore the launch of tokenized assets (including stablecoins).
Nasdaq said in a filing on Monday that it believes the market can "continue to retain the advantages and protective mechanisms of the national market system" while using tokenization technology.
"A blanket exemption from the national market system and related protection mechanisms to accommodate tokenization is neither necessary nor in the best interests of investors," Nasdaq said.
Still, some critics of the industry warn that the frenzy around tokenization could create new systemic risks, especially in the absence of strict regulation. In July, U.S. Securities and Exchange Commission Commissioner Hester Peirce — who has often spoken positively about cryptocurrencies — said that tokenized securities cannot circumvent current securities laws.
Nasdaq mentioned Pierce's previous statement in the filing and said that its latest proposal for tokenized securities trading would be advanced within this legal framework.
"Equal substantive rights"
The term “tokenization” is used in various ways, but generally speaking, it refers to the process of converting financial assets such as bank deposits, stocks, bonds, funds, and even real estate into crypto-assets.
Under the leadership of new SEC Chairman Paul Atkins, the agency is trying to revise cryptocurrency regulatory rules and reduce regulations that have been criticized by Wall Street as "unduly burdensome." If passed, the latest policy would be a major victory for the digital asset industry, which has long pushed for targeted rules to enable deeper integration of cryptocurrencies into the traditional financial system.
On Monday, Nasdaq noted that the way tokenized stocks are traded in European markets "raises concerns" because some trading platforms provide investors with access to U.S. tokenized stocks without providing them with actual equity stakes in the companies.
Nasdaq proposed in its new proposal that it will improve the admission standards for tokenized securities, requiring them to have "the same substantial rights and interests as similar traditional securities." If these conditions are met, tokenized securities will trade on the “same order book and under the same trade priority rules” as traditional securities, the agency said.
Nasdaq added: "If a tokenized instrument does not fully or substantially confer such rights, the exchange will not treat it as an equivalent instrument to a traditional security... but will instead identify it as a different financial instrument."
Nasdaq said that if its proposal is approved and the central clearing agency's infrastructure is put into use, investors will be able to purchase stocks on Nasdaq and complete settlement in the form of tokens, without changing the way orders are routed, priced, monitored and reported throughout the process.
The agency said that U.S. investors are expected to witness the first securities transactions settled in the form of tokens by the end of the third quarter of 2026, assuming the relevant infrastructure of the U.S. Depository Trust Company is ready by then.