The US Securities and Exchange Commission (SEC) on Wednesday approved Nasdaq’s proposal to allow certain securities to be traded in tokenized form, a major milestone in integrating blockchain technology into US stock markets.
Nasdaq’s tokenization plan relates to a pilot led by the Depository Trust Company (DTC), which will be responsible for clearing and settling tokenized trades. Nasdaq requested regulatory permission in September.
Under the framework, eligible Nasdaq participants can choose to settle trades as blockchain-based tokens rather than through standard book-entry systems.
The tokenized shares will be traded alongside traditional shares on the same order book and at the same price. They will have identical rights, use the same symbol and CUSIP (identification number) and follow existing market rules.
The SEC said the structure meets investor protection standards and noted that surveillance, data reporting and settlement deadlines remain intact.
The move comes as tokenization of traditional assets such as stocks, bonds and funds has become a rapidly growing sector in the digital assets space. The process allows for near-instant, 24-hour trading with tokens pegged to real-world assets.
The trend has captivated the major American stock exchanges. Nasdaq said last week that it is developing a framework that would allow publicly traded companies to issue blockchain-based versions of their shares. It has partnered with crypto exchange Kraken to distribute tokenized stocks globally. Meanwhile, Intercontinental Exchange (ICE), the owner of the New York Stock Exchange, invested in cryptocurrency exchange OKX with plans to launch new tokenized stocks and cryptocurrency futures.
Read more: Here’s why Nasdaq and NYSE owner are putting the $126 trillion stock market on blockchain
