In a major effort to bring blockchain into the heart of traditional finance, Nasdaq has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to allow tokenized versions of equity securities and exchange-traded products (ETPs) to trade on its main exchange platform. The filing, formally known as SR-NASDAQ-2025-072, seeks to modernize how securities are represented and settled — without abandoning the rigorous structure of the national market system.
This development could mark a turning point in how capital markets embrace blockchain technology: rather than isolated experiments or fringe trading venues, tokenized stocks and funds could become fully integrated into the same order books, execution systems and regulatory framework as their traditional counterparts.
Nasdaq’s proposal would amend its rules (specifically under its “Equity 1” rulebook) to define “security” more broadly, to include both traditional, non-blockchain representations and tokenized forms—meaning digital representations of shares, or ETPs, issued and traded via distributed-ledger or blockchain technology.
Critically, Nasdaq is not suggesting a separate, parallel exchange for blockchain-based assets. Instead, it proposes that tokenized securities trade on the same order book, with the same execution priority, and under the same surveillance, reporting, and investor-protection rules as traditional securities.
Nasdaq explains that for a tokenized security to qualify under this model, it must be fungible with its traditional counterpart, share the same CUSIP number, and carry the same material rights—including voting, dividends, and liquidation rights.
When orders are sent, market participants would have the option (on a trade-by-trade basis) to request tokenized settlement. If they choose that route, Nasdaq would flag the trade accordingly, and post-trade clearing and settlement would be handled via the Depository Trust Company (DTC), which would deliver a blockchain-based token to the participant’s digital wallet.
Market data for tokenized securities would flow through Nasdaq’s existing infrastructure. Nasdaq intends to use its regular data-feeds, so pricing, pre-trade transparency and the overall market structure would remain familiar to investors.
This isn’t a niche bet. Nasdaq argues that tokenization is no longer just a speculative or experimental play: it’s a compelling modernization path for core market infrastructure. As demand for more efficient settlement, fractional ownership, and broader global access grows, tokenization may help unlock a new generation of capital markets participation.
If approved, the proposal could bring several key advantages:
- Faster, more flexible settlement: Blockchain settlement could theoretically shorten clearance and settlement cycles, though Nasdaq still plans to rely on DTC’s infrastructure and models settlement on existing timelines (e.g., T+1 for eligible trades).
- Interoperability with traditional markets: Because tokenized and traditional versions share the same CUSIP and are treated as fungible, liquidity would remain deep and unified—not fragmented into separate, isolated token trading venues.
- Preserved investor protections: Nasdaq emphasizes that tokenized shares would not dilute any fundamental rights of investors. They would retain voting, dividends, and occupancy in liquidation events, just like conventional shares.
- Regulatory alignment: By integrating token trading into its existing rules and oversight framework, Nasdaq seeks to avoid the pitfalls of unregulated or semi-regulated token platforms.
From a broader financial-system perspective, this could be one of the most meaningful institutional steps yet toward on-chain finance in the U.S.
While the promise is significant, especially for the potential democratization and modernization of markets, there are important hurdles to clear before tokenized securities become real.
DTC would have to support tokenized settlement robustly. That means not only issuing tokens to digital wallets but also ensuring that those tokens can be securely tracked, reconciled, and redeemed. Any weakness in this infrastructure could undermine investor confidence or raise operational risks.
Even though the proposal stays within existing SEC rules, tokenized securities pose novel regulatory questions—especially around custody, blockchain risk, smart contract vulnerabilities, and the potential for misuse. Nasdaq will need to convince regulators that tokenization does not weaken investor protections.
One big risk is liquidity fragmentation. If tokenized shares are not treated as fully equivalent, or if not enough market makers step in, liquidity could split between traditional and tokenized forms. That fragmentation could lead to wider spreads, execution risk, and reduced market efficiency. Nasdaq’s proposal explicitly warns against this risk, but execution will matter.
Blockchain systems are not immune to outages, bugs, or attacks. While Nasdaq’s model doesn’t rely on creating a brand-new blockchain, the integration of tokenized settlement, DTC, and order-processing systems creates new attack surfaces and failure modes. Ensuring those are resilient and secure will require serious engineering and counterparty risk mitigation.
Just because tokenized securities are a possibility doesn’t guarantee that issuers, broker-dealers, market makers, and investors will adopt them quickly. For tokenization to take off, it needs strong demand not just from crypto-native firms, but from traditional institutions, public companies, and regulators.
Now that Nasdaq has filed its proposal, the SEC has opened the process for public comment. Stakeholders—from crypto firms to broker-dealers to public companies—will weigh in. The final approval will depend on SEC review, technical infrastructure readiness (especially from DTC), and market demand.
Nasdaq expects that if the SEC approves the proposal, the infrastructure (including DTC’s tokenization capabilities) could be in place by Q3 2026, assuming everything moves smoothly.
During this timeframe, important things to monitor include:
- How many issuers decide to make shares tokenizable
- How market makers and broker-dealers prepare for “tokenized routing” and execution
- What wallet providers or digital custody firms partner with DTC to hold on-chain shares
- How regulators respond to issues related to smart-contract risk, auditability, and investor protections
If approved and widely adopted, Nasdaq’s proposal could mark a foundational moment for capital markets. By enabling tokenized securities under a regulated, trusted exchange and clearing structure, Nasdaq is signaling that blockchain isn’t just for crypto: it’s a technological evolution of mainstream finance.
Tokenized securities could open up new possibilities: 24/7 global settlement, fractional ownership, programmable equity, and seamless on-and-off ramps between traditional markets and decentralized finance. That could accelerate capital formation, broaden access, and eventually reshape how companies raise money and how investors participate.
It’s also a symbolic embrace by a major financial institution of blockchain’s potential—not just as a novelty, but as a tool to modernize how we trade, clear, and value real-world companies. If executed successfully, Nasdaq could become a bridge between legacy markets and the future of digital assets.
Nasdaq’s proposal to trade tokenized securities is one of the most ambitious and potentially consequential integrations of blockchain into traditional finance. Rather than building a separate, unregulated token venue, Nasdaq wants to bring tokenized shares into its core equity markets, under the same rules, protections and infrastructure that have governed U.S. markets for decades.
The road ahead will not be easy: clearing, regulatory, technological and market risks all loom large. But if it works, the payoff could be massive: a new era where shares, funds and perhaps other financial instruments live natively on-chain — fully compatible with the world’s most trusted exchanges.
For crypto watchers, financial institutions, and digital-asset innovators, this may be one of the most important regulatory and technological developments of 2025. Tokenization might finally be heading from experiment to infrastructure—and Nasdaq may be leading the charge.