Nasdaq Seeks SEC Approval to List and Trade Tokenized Stocks

Nasdaq Files for SEC Rule Change to Enable Trading of Tokenized Stocks

Nasdaq, the world’s second-largest stock exchange by market capitalization, has formally requested the U.S. Securities and Exchange Commission (SEC) to approve a rule amendment that would allow it to list and trade tokenized stocks. The filing, submitted on Monday, proposes adjustments to the regulatory framework to treat tokenized shares as equivalent to traditional securities for trading, clearing, and settlement purposes.

Proposed Regulatory Adjustments and Labeling Requirements

The exchange’s filing targets amendments to key definitions within securities regulations, including the definition of a security itself, to accommodate tokenized stocks. Nasdaq emphasized that tokenized assets, which utilize blockchain technology to represent ownership rights digitally, should be clearly labeled. This labeling would ensure that all market participants, including entities responsible for clearing and settlement such as the Depository Trust Company, can accurately process these transactions.

According to Nasdaq, tokenized stocks would receive the same execution priority as their traditional counterparts on the exchange, maintaining parity in trade processing and market fairness.

Integrating Tokenized Securities into Established Markets

Nasdaq’s proposal underscores the importance of trading tokenized securities within regulated markets overseen by established securities market participants. The exchange cautioned against the emergence of isolated or “siloed” trading venues that could fragment liquidity and obscure best market-wide prices for investors.

“Although tokenization technology presents novel capabilities by which to record evidence of securities ownership and transactions, the trading of tokenized securities must occur largely as Congress prescribed when it enacted and subsequently amended the Act,” Nasdaq stated. The company advocated for tokenized securities to trade within the framework of national securities exchanges, alternative trading systems, and FINRA-regulated broker-dealers, integrated into an interconnected national market system.

Concerns Over European Tokenized Stock Offerings

Nasdaq also expressed apprehension about certain European trading platforms offering tokenized versions of U.S. equities. The exchange highlighted that these platforms often do not provide investors with actual shares but rather digitally tradable rights to shares held in the platforms’ own accounts. This structure, Nasdaq warned, may deprive investors of full shareholder rights, including voting privileges.

This filing arrives amid a global rise in real-world asset tokenization, with various platforms listing tokenized U.S. investment products such as Tesla shares or ETFs for users outside the U.S. While U.S. investors currently have broad access to traditional equities through established brokerages, tokenization efforts seek to bridge access gaps in other regions.

Industry voices, such as Alchemy Pay’s Ailona Tsik, have noted that tokenization platforms aim to serve markets where direct access to U.S. securities has been limited, particularly outside the U.S.