SEC approves Nasdaq tokenized securities trading
Blockchain integration with Russell 1000 stocks and ETFs launches first half of 2027
The U.S. Securities and Exchange Commission approved a landmark Nasdaq rule change on March 18 that will enable trading of tokenized securities on the exchange, marking a significant step toward integrating blockchain technology into traditional financial markets.
Under the new framework, tokenized versions of stocks and exchange-traded funds from the Russell 1000 Index and selected ETFs benchmarked to the S&P 500 and Nasdaq-100 can trade alongside traditional shares. These digital tokens will be fully fungible with their conventional counterparts, sharing identical trading symbols, CUSIPs, and shareholder rights including dividends and voting power.
The pilot program, overseen by the Depository Trust Company, will manage post-trade settlement and tokenization processes. Tokenized securities will trade on the same order book as traditional shares, ensuring identical execution priority, pricing, and market data treatment. Should tokenization requirements not be met, trades will seamlessly revert to traditional settlement on a T+1 basis.
"This decision accelerates the integration of blockchain technology into mainstream finance," industry observers noted, highlighting potential benefits including 24/7 trading, near-instant settlement, and programmable ownership. Nasdaq's approach maintains existing regulatory frameworks and investor protections while modernizing processes for corporate actions, proxy voting, and shareholder engagement.
In a related development announced on March 9, Nasdaq partnered with Payward, the parent company of cryptocurrency exchange Kraken, to develop an "equities transformation gateway." This infrastructure will connect Nasdaq's regulated market infrastructure with Kraken's xStocks tokenization platform, facilitating the movement of tokenized equities between permissioned institutional markets and permissionless blockchain networks.
The SEC's approval aligns with recommendations from its Investor Advisory Committee, which previously acknowledged the efficiency benefits of tokenization while emphasizing that innovations must operate within established regulatory frameworks. Nasdaq is expected to provide at least 30 days' notice before the live launch, with distributed ledger technology services anticipated to become operational in the first half of 2027.
The development could have transformative effects on global capital markets, potentially creating a "digital pipeline" for U.S. dollar assets and attracting international capital to blockchain-based securities. As Nasdaq noted in its announcement, the initiative aims to enhance efficiency and transparency in trading while preserving the integrity of traditional market structures.