Nasdaq strongly promotes "tokenized securities," which may be approved for trading on major exchanges in the United States for the first time

Nasdaq is pushing to introduce tokenized securities trading on major exchanges in the United States. If approved, this move would mark the first integration of blockchain technology into the core of the U.S. national market system, potentially reshaping the trading and settlement of securities.

On Monday, Nasdaq submitted a rule amendment proposal to the U.S. Securities and Exchange Commission (SEC), aiming to allow listed stocks and exchange-traded products (ETPs) on its mainstream market to be traded in "traditional digital or tokenized form." This is the most significant attempt so far by an exchange operator to introduce blockchain-based settlement into the national market system.

This action follows the SEC's latest rulemaking agenda. The agenda indicates that regulators are considering amending rules to allow the trading of crypto assets on national securities exchanges and alternative trading systems (ATS). In the context of a more lenient regulatory stance on cryptocurrencies under the Trump administration, Nasdaq's proposal is seen as a key step for mainstream financial institutions on Wall Street to ramp up their involvement in the asset tokenization wave.

If the proposal is approved, it will be the first time tokenized securities are permitted to be traded on major U.S. securities exchanges. This move reflects the growing demand from institutional investors for tokenized assets, and industry supporters believe that tokenization can significantly enhance the liquidity and efficiency of the financial system.

Nasdaq Proposal: Aiming to Embed Tokenization Technology into Existing Market Framework

In its proposal, Nasdaq emphasizes that its plan aims to integrate tokenization technology into the existing market framework rather than disrupt it. Nasdaq stated in the document:

“We believe that the market can continue to provide the benefits and protections of the national market system while utilizing tokenization.”

It argues that “a comprehensive exemption from the national market system and related protections is neither necessary nor in the best interest of investors to achieve the goals of tokenization.”

The proposal echoes SEC Commissioner Hester Peirce's earlier statement that tokenized securities cannot circumvent existing securities laws. Nasdaq indicated that its plan is constructed within this legal framework.

To ensure investor rights, Nasdaq plans to set high standards for tokenized securities, requiring them to have "the same substantive rights and privileges as traditional securities of the same class." If these conditions are met, tokenized securities will trade on "the same order book and according to the same execution priority rules" as traditional securities. Nasdaq clearly stated that if tokenized instruments do not possess equivalent rights, they will be considered a different instrument.

Regulatory Easing Paves the Way

According to Nasdaq's vision, if the proposal is approved and the infrastructure for central clearinghouses is in place, investors will be able to purchase a stock on Nasdaq and complete the settlement in token form, without changing the routing, pricing, monitoring, or reporting methods of the orders Nasdaq expects that, assuming the infrastructure of the Depository Trust Company is ready, U.S. investors may see the first token-settled securities transactions as early as the end of the third quarter of 2026.

Nasdaq's proposal comes at a delicate moment when the U.S. regulatory environment is changing. Under the leadership of new Chairman Paul Atkins, the SEC is attempting to adjust cryptocurrency-related regulations to reduce what has long been criticized by Wall Street as "overly burdensome" rules.

Just days before Nasdaq submitted its proposal, the SEC had announced its agenda, which included potential rule revisions to facilitate the trading of crypto assets on national exchanges. If relevant policies are implemented, it would be a significant victory for the digital asset industry, which has long called for more adaptive rules, helping to further integrate crypto assets with traditional finance.

Marcin Kazmierczak, co-founder of RedStone, stated that he believes the conditions for the large-scale application of tokenization are basically mature, mainly due to a more favorable regulatory environment, advancements in blockchain technology, and growing interest from institutional investors in tokenized projects.

Opportunities and Challenges

Asset tokenization generally refers to the process of converting financial assets such as stocks, bonds, funds, and even real estate into crypto assets. Nasdaq President Tal Cohen stated on his LinkedIn profile that combining tokenization with traditional markets provides "extraordinary opportunities to accelerate trade settlement, automate processes, and improve efficiency."

However, not everyone is optimistic about this. A report from the World Economic Forum in May pointed out that insufficient liquidity in the secondary market and the lack of clear global standards are the two main challenges to the widespread adoption of tokenization. The World Federation of Exchanges also expressed concerns and called for regulators to curb the rush towards tokenization.

Critics warn that, in the absence of strict regulation, tokenization could introduce new systemic risks. Some of the world's largest banks, including Bank of America and Citigroup, have indicated that they may explore launching tokenized assets, including stablecoins