Nasdaq has received approval from the U.S. Securities and Exchange Commission to proceed with its tokenized equities pilot.
Summary
- Nasdaq received SEC approval to launch a pilot allowing select participants to trade and settle equities in tokenized form alongside traditional shares.
- The pilot is limited to securities within the Russell 1000 and major index linked ETFs, with tokenized shares carrying the same rights and pricing as standard equities.
According to the SEC’s approval filing, Nasdaq can now move ahead with “eligible participants” choosing to trade securities in either traditional or tokenized form on the same platform.
Tokenization involves representing real-world assets as digital tokens on blockchain infrastructure, allowing for more efficient settlement and extended market functionality.
Per previous coverage, Nasdaq first filed its proposal in September to enable trading of high-volume stocks in either a traditional format or as tokenized versions within the same exchange environment.
At the time, CEO Tal Cohen said the model can shorten settlement cycles and improve processes such as proxy voting, while maintaining investor protections.
The SEC has limited the pilot to securities in the Russell 1000 Index, which tracks the largest publicly traded companies in the U.S., along with exchange-traded funds tracking the S&P 500 and Nasdaq 100 indices.
According to the filing, there were concerns around market surveillance and potential pricing discrepancies during the review process. The commission said these were addressed through amendments that clarified safeguards.
Nasdaq has also partnered with crypto exchange Kraken, along with tokenization platform Backed, to build infrastructure that would allow public companies to create and issue tokenized shares.
Wednesday’s approval follows growing demand for tokenized assets from both crypto firms and traditional financial institutions seeking to modernize market infrastructure.
The SEC has also authorized the DTCC to pilot tokenization initiatives, while the New York Stock Exchange’s parent company Intercontinental Exchange has backed a project with OKX to launch tokenized stocks.
