Nasdaq wins SEC approval to move stocks onchain

The Securities and Exchange Commission has granted approval to Nasdaq for a pilot program that will enable tokenized securities to trade alongside traditional stocks on the same unified platform.

“Nasdaq winning SEC approval to move stocks onchain shows how Wall Street is taking charge of crypto tech Nasdaq's structure the SEC approved opens door to bring blockchain benefits to equities, while preserving the same-old intermediaries and market structure, industry insiders say”

@coindesk

This landmark decision represents a significant step toward blockchain integration in mainstream financial markets, allowing the traditional exchange to test blockchain-based versions of stocks under its Depository Trust Company (DTC) pilot program.

@coindesk

The approval comes after Nasdaq initially sought SEC approval for tokenized stocks in September 2025, with the SEC now acknowledging that Nasdaq's proposal differs from current market offerings by ensuring tokenized securities maintain rights similar to traditional shares.

This development signals that tokenization is moving from experimental phase to practical implementation within regulated markets.

The Nasdaq tokenization program will initially target high-volume ETFs and stocks, specifically focusing on constituents of the Russell 1000 Index including major companies like Apple, Microsoft, Nvidia, and Amazon.

Additionally, ETFs tracking the S&P 500 and Nasdaq-100 indices will be included in the early asset scope.

AMBCrypto

The program operates on an opt-in basis where eligible participants can choose whether to trade a traditional or tokenized stock through a designated flag upon order entry.

This mechanism allows investors to communicate their blockchain and digital wallet preferences to the DTC, which then carries out the tokenization preference.

Importantly, if tokenization requirements are not met, trades will default to traditional settlement methods, ensuring market continuity.

The SEC approval has been positioned as a controlled framework that maintains investor protection while embracing blockchain technology.

The Commission specifically cited Section 6(b)(5) of the Securities Exchange Act, which requires exchange rules to prevent fraud, promote equitable trading principles, and remove impediments to a free and open market.

Tokenized securities must mirror traditional shares in rights and privileges, limiting the risk of divergence in value or investor protections.

Regulatory concerns around market surveillance and diverging prices were addressed through amendments that provided more detailed oversight mechanisms.

Nasdaq emphasized that its core trading infrastructure remains unchanged, with existing order types, routing strategies, trading sessions, and market data feeds applying equally to both tokenized and traditional shares.

The Nasdaq tokenization initiative is part of a broader industry trend toward blockchain adoption in traditional finance, with major exchanges and financial institutions embracing the technology.

The approval comes shortly after Nasdaq announced a partnership with Kraken (through its parent company Payward) to enable trading of tokenized stocks between traditional markets and blockchain networks using xStocks platform.

Blockonomi

This integration may likely be tied to the DTC pilot and eventually accord xStock holders similar legal rights as traditional shareholders.

Concurrently, the Intercontinental Exchange (NYSE owner) has also set its sights on tokenization, investing in crypto exchange OKX in early March to launch tokenized stocks.

SEC Chair Paul Atkins has indicated the agency will soon seek public comment on crypto-related exemptions, including a 'fundraising exemption' for certain securities involving crypto.

Industry analysts view this development as potentially disruptive to traditional asset management, with one observer comparing it to how ETFs disrupted mutual funds.

“SEC Approves Nasdaq Tokenized Securities Trading Highlights - The SEC approved Nasdaq's rule change on March 18, allowing eligible participants to settle trades in Russell 1000 stocks and S&P 500/Nasdaq 100 ETFs as tokenized securities”

Coingape

For ETF analyst Nate Geraci, the SEC approval sets the stage for a massive disruption by the tokenization boom, stating: 'Tokenization will be as disruptive to asset management as ETFs were to mutual funds… Will basically be adapt or die a slow death.'

Coingape

The sentiment reflects growing institutional acceptance of blockchain technology.

This momentum comes amid an ongoing debate over the Clarity Act, legislation aimed at establishing a comprehensive crypto regulatory framework.

Despite regulatory uncertainties, one observer captured the prevailing mood: 'With or without the Clarity Act, we move forward.'

The program will demonstrate how blockchain can fit inside regulated equity markets, potentially paving the way for broader adoption of crypto infrastructure and financial products.