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In a landmark move blending traditional finance with cutting-edge technology, Nasdaq is seeking approval to become the first major U.S. exchange to trade fully tokenized versions of its listed equities and exchange-traded products (ETPs). The proposal, submitted in September 2025, aims to allow investors to buy and sell “stock tokens” digital representations on blockchain that correspond directly to real shares. If approved by U.S. Securities and Exchange Commission (SEC), this could fundamentally change how securities are issued, traded, and settled.
At the heart of the initiative lies a careful balancing act: Nasdaq wants to bring the efficiency and transparency of blockchain to equity markets without dismantling existing regulatory safeguards or market structure. Under the proposed rules, tokenized securities would carry the same CUSIP identifier, shareholder rights, and trading priority as their traditional counterparts. Trades could occur on the same order book, with the added option per trade of settlement via blockchain instead of traditional clearing mechanisms.
From a theoretical standpoint, the tokenization of equities represents a major evolution perhaps the closest merger yet between conventional capital markets and decentralized finance paradigms. Advocates argue that tokenized stocks could bring substantial benefits: faster settlement, improved liquidity, reduced counterparty risk, and the potential for 24/7 trading windows. For many investors and institutions, that means a more flexible, efficient market that leverages technology without sacrificing stability.
Nasdaq’s push comes amid a broader wave of interest in tokenized securities globally. But the exchange is not pursuing this as a radical overhaul; rather, it frames the effort as an incremental, regulatory-compliant enhancement. As Matt Savarese, Nasdaq’s head of digital assets, recently put it, the exchange wants to “move as fast as we can” to bring tokenization to the mainstream while preserving fairness and investor protections.
Regulatory approval remains the critical hurdle. The proposal to the SEC would amend Nasdaq’s rules (Equity 1 and Equity 4) to explicitly allow tokenized trading. If accepted, the timeline discussed by the exchange and industry insiders suggests the first token-settled trades could occur by the end of third quarter 2026, contingent on infrastructure readiness.
Critics including some industry bodies caution that tokenization must not compromise investor rights or market integrity. They point out that many existing “token-stock” offerings outside the U.S. have not granted actual shareholder rights; they were essentially derivatives or wrappers rather than true shares. For tokenized equities to be meaningful, the tokens must confer the same rights voting, dividends, disclosure access as traditional shares. Otherwise, the innovation risks being merely cosmetic, or worse, misleading.
Still, the theoretical upside remains alluring. Should the SEC grant approval, Nasdaq’s tokenized platform could serve as a bridge connecting legacy equity markets with the speed, transparency, and accessibility of blockchain. Retail investors might benefit from more efficient settlement and potentially expanded access; institutions could gain operational cost savings and enhanced settlement finality. Moreover, by embedding tokenization within an established exchange rather than a fringe platform, regulatory compliance, oversight, and investor protections would remain central.
In many ways, Nasdaq’s efforts reflect a broader paradigm shift: stocks may soon not just be digits on a screen, but units on a blockchain. For traditional finance, this represents modernization. For blockchain pioneers, it’s validation. And for investors, it could mean improved markets provided the leap is made carefully, transparently, and with safeguards intact.
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FAQs
Q: What does “tokenized stock” mean in the context of Nasdaq’s plan?
A tokenized stock is a digital representation of a real share of equity or an ETP, recorded on a blockchain. Under Nasdaq’s proposal, those tokens would carry the same shareholder rights, CUSIP identifiers, and trading priority as traditional shares, allowing them to be traded and settled on-chain or via conventional methods.
Q: When could tokenized stocks start trading on Nasdaq?
If the SEC approves Nasdaq’s rule change and supporting infrastructure is completed, the first token-settled trades could happen by the end of the third quarter of 2026.
Q: What advantages do tokenized stocks offer compared with traditional shares?
Tokenized stocks can deliver faster settlement, potentially lower counterparty risk, improved capital efficiency, and may one day enable more flexible trading (including outside standard trading hours). They also offer a modern framework that merges blockchain transparency with regulated equity markets.
Q: Will tokenized stocks carry the same rights as regular stocks (dividends, voting, disclosures)?
Yes Nasdaq’s proposal requires that tokenized stocks share the same CUSIP and shareholder rights as traditional shares, including vote rights, dividends, and statutory disclosures.
Q: Are there any risks or concerns associated with tokenizing stocks?
Yes. Critics caution that if not properly structured, tokenized stocks might fail to deliver real shareholder rights. There are also concerns around custody of private keys, regulatory compliance, market fragmentation, and ensuring that token trades respect existing settlement, auditing, and disclosure standards.