Nasdaq has filed a proposal with the U.S. Securities and Exchange Commission (SEC) to enable the trading of stocks in tokenized form, leveraging blockchain technology to potentially enhance efficiency and transparency in financial markets. This move highlights a growing trend towards asset tokenization among major financial institutions.

Nasdaq Seeks SEC Approval for Tokenized Stock Trading

Nasdaq, a prominent global stock exchange, has submitted a significant proposal to the U.S. Securities and Exchange Commission (SEC), seeking a rule change that would permit the trading of equity securities and exchange-traded products (ETPs) in tokenized form on its markets. The filing, submitted on September 8, 2025, outlines a framework for integrating blockchain technology into traditional financial market infrastructure.

The Event in Detail: A Hybrid Market Approach

Under Nasdaq's proposal, tokenized securities would trade alongside their traditional counterparts on the same order book. This integration is contingent on tokenized assets being fungible, sharing the same CUSIP identifier, and providing identical material rights, such as voting, dividends, and liquidation claims. The initiative offers market participants the flexibility to choose between traditional digital representation or blockchain-based tokenized forms for trading securities.

The Depository Trust Company (DTC) is slated to play a crucial role in this process, handling the post-trade clearing and settlement by converting traditional book-entry positions into blockchain-based tokens. This innovative hybrid model is designed to significantly reduce settlement times from the current T+2 cycle to near-instantaneous T+0, marking a substantial operational improvement.

Analysis of Market Reaction: Driving Efficiency and Transparency

Nasdaq's proactive stance on tokenization is rooted in the perceived benefits of blockchain technology, including faster settlements, more efficient reconciliation processes, and enhanced transparent record-keeping. The exchange argues that these efficiencies can be achieved without compromising the robust safeguards of the U.S. financial system. Chuck Mack, Senior Vice President of North American Markets at Nasdaq, emphasized that the goal is to seamlessly integrate digital assets into the exchange's existing architecture, utilizing the DTC to clear and settle trades in token form under the current regulatory framework.

This strategic move positions Nasdaq at the forefront of modernizing market infrastructure, aiming to improve liquidity, reduce operational costs—with some estimates suggesting a 30-50% reduction—and increase capital efficiency within financial markets. The proposal reflects a growing industry recognition of blockchain's potential to revolutionize how securities are traded and settled.

Broader Context and Implications: A Pivotal Shift Towards Tokenization

Nasdaq's filing is part of a broader trend of institutional adoption of blockchain technology in mainstream financial markets. Major players like BlackRock and Franklin Templeton are actively exploring and investing in asset tokenization. Larry Fink, CEO of BlackRock, has been a vocal proponent, describing tokenization as the "next generation for markets" and asserting that "every financial asset can be tokenized." BlackRock has already launched BUIDL, a tokenized money-market fund, and is testing tokenized fund shares through JPMorgan's Kinexys infrastructure.

Similarly, Franklin Templeton is expanding its digital asset initiatives, including a collaboration with Binance to develop digital asset products. This underscores a collective push to bridge traditional finance and the digital asset ecosystem, aiming for benefits such as fractional ownership, 24/7 trading capabilities, and enhanced global access to financial products.

Projections indicate substantial growth in the value of tokenized assets, with estimates suggesting an increase from $300 billion to $18.9 trillion by 2033. This potential shift promises increased market liquidity and continuous price discovery, unconstrained by traditional market hours.

However, the path to widespread tokenization is not without its challenges. Regulatory uncertainty remains a significant factor, with the SEC still deliberating on Nasdaq's rule change request. Furthermore, concerns around cybersecurity vulnerabilities, potential price deviations for tokenized real-world assets, and the need for robust compliance with Know Your Customer (KYC) standards underscore the complexity of this evolving landscape.

Looking Ahead: Regulatory Decisions and Infrastructure Development

The SEC has extended its review period for Nasdaq's proposal, with a potential decision anticipated around November 2025. While Nasdaq is prepared to launch trading in tokenized securities upon approval, the full implementation is also contingent on the DTC's blockchain infrastructure being ready, which is projected for the end of Q3 2026. The coming months will be critical in observing regulatory responses and the continued development of the necessary infrastructure that will shape the future of tokenized securities trading. The market will closely watch for further clarity on regulatory frameworks and the pace of technological adoption by key market participants. This period will be pivotal in determining the extent to which blockchain technology redefines Wall Street's traditional mechanisms.