Key Highlights
- SEC approves Nasdaq’s rule change allowing select stocks and ETFs (like Russell 1000 and major index trackers) to settle as tokenized securities via an opt-in system.
- Trades will use a “tokenization flag,” enabling blockchain settlement through the Depository Trust Company (DTC) pilot while maintaining identical pricing, liquidity, and order book priority.
- Tokenized shares remain fully fungible with traditional stocks, carrying the same ticker, CUSIP, voting rights, dividends, and investor protections.
The U.S. Securities and Exchange Commission (SEC) has approved a rule change that allows Nasdaq to trade securities in tokenized form, marking one of the most significant steps yet toward integrating blockchain technology into traditional American equity markets.
The approval, published on March 18 under SEC Release No. 34-105047, greenlights a proposal that Nasdaq originally filed in September 2025 under File No. SR-NASDAQ-2025-072. The exchange later revised the filing through Amendment No. 2 on January 30, 2026, which replaced the original proposal in its entirety.
As per the approval, the move will allow participants to opt to have trades in Russell 1000 stocks, as well as ETFs tracking the S&P 500 and Nasdaq 100, settled as tokenized securities rather than through traditional methods.
How the framework works
Under the approved framework, eligible Nasdaq market participants can choose to settle a trade in tokenized form by selecting a designated tokenization flag at the time of order entry. This flag communicates their preference, along with their blockchain selection and digital wallet address, to the Depository Trust Company (DTC), which handles the clearing and settlement of tokenized trades.
The DTC is operating this under a pilot program authorized by a Commission No Action Letter dated December 11, 2025. Importantly, a tokenized share and its traditional counterpart will trade on the same order book, with identical execution priority, pricing, and market data treatment. The system is entirely opt-in. If a market participant does not select the tokenization flag, their trade settles through the traditional book-entry process as usual.
Nasdaq’s core trading infrastructure remains unchanged. All existing order types, routing strategies, fee schedules, and trading sessions will apply equally to both tokenized and traditional shares. Surveillance systems operated by both Nasdaq and the Financial Industry Regulatory Authority (FINRA) will monitor both forms using the same underlying data.
The SEC, in its order, stated that the proposal meets regulatory requirements designed to protect investors and maintain fair and orderly markets.
Tokenized shares carry full investor protections
A key element of the approval is that tokenized securities must remain fully fungible with their traditional counterparts. They share the same ticker symbol, the same CUSIP identification number, and the same shareholder rights. Investors holding tokenized shares retain standard protections, including voting rights, access to dividends, and claims on residual assets.
Nasdaq has said it will issue Equity Trader Alerts identifying which securities are eligible for tokenized trading and will notify members at least 30 days before launching any new tokenized instruments.
Broader tokenization momentum
The approval comes at a time when tokenization is rapidly gaining traction across traditional finance. Just last week, Nasdaq announced a partnership with crypto exchange Kraken’s parent company Payward to develop a system for issuing and distributing tokenized versions of public company stocks to international markets. Meanwhile, Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, recently made a strategic investment in crypto exchange OKX, with plans to launch tokenized stocks and crypto futures products.
The SEC approval also arrives just one day after the Commission and the Commodity Futures Trading Commission (CFTC) jointly issued interpretive guidance that created a formal token taxonomy for crypto assets, classifying them into digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. SEC Chairman Paul S. Atkins said at the Digital Chamber’s DC Blockchain Summit on March 17 that most crypto assets are not themselves securities, a statement that drew enthusiastic applause from the crypto audience.
Additionally, SEC Commissioner Hester Peirce, who heads the agency’s Crypto Task Force, recently confirmed that SEC staff is working on a limited innovation exemption for certain tokenized securities, though she stressed it would be far narrower than the blanket exemption some in the industry had hoped for.
What comes next
Nasdaq has indicated that while it is actively assessing multiple methods of tokenization, this initial framework is specifically tied to the DTC pilot. Any future alternative approaches would require separate filings with the SEC.
The first token-settled trades on Nasdaq could potentially take place by the end of the third quarter of 2026, once the DTC completes necessary system updates and eligible participants are onboarded.
For an industry that has spent years calling for regulatory clarity, the SEC’s approval of tokenized securities trading on one of the world’s largest stock exchanges is a concrete signal that blockchain technology is no longer being treated as separate from mainstream finance. It is being built into it.
Also Read: SEC and CFTC Gives Crypto Industry What It Wanted: New Crypto Rules
