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The US Securities and Exchange Commission (SEC) has approved changes to Nasdaq’s rules that allow certain securities to be traded in tokenized form, a move that integrates blockchain technology into modern stock markets.
The acceptancewhich was released on Wednesday, is part of an investigation into the digital display of products that are managed to maintain consumer safety and stability in the market.
Under the new policy, eligible securities — including stocks in the Russell 1000 Index and exchange-traded funds (ETFs) tracking major indices such as the S&P 500 – can be represented and traded as Nasdaq stocks.
These token formats are interchangeable with traditional shares, sharing the same tokens, CUSIP numbers, and ownership rights.
Investors who own interest have a set of protections, including voting rights, rights to share shares, and claims on residual assets, ensuring compliance with existing safety regulations.
The system operates as a pilot program through the Depository Trust Company (DTC), which oversees the implementation of transactions and tokenization. Market participants can choose to trade in the form of tokens using the instructions provided at the entry point.
Earlier this month, the Nasdaq united and Payward, Kraken’s parent company, to enable trading of tokenized stocks between social markets and blockchain networks using Payward’s xStocks platform.
Bitcoin hit
This move will not affect the price of Bitcoin or the network, but I agree that the comfort is growing with the economy based on the blockchain, which will strengthen the interest of organizations in digital money.
Incorporating well-known securities into the capital markets, it could lead to the promotion of the introduction of crypto-assets and financial products compatible with Bitcoin.
If the requirements of tokenization are not met, the default transaction will be fixed in the traditional way. Nasdaq has ensured that its trading infrastructure – including order types, management systems, trading units, and market feed – has not been changed, ensuring that the securities that are indexed are fully integrated into the existing system.
Standardization continues at T+1, aligning tokenized transactions with current standards.
Nasdaq emphasized that the information sector and its traditional partner will also sell the same book, with a similar priority and market support. Monitoring systems will monitor all types of securities using the same data, which is available from Nasdaq and FINRA.
The Exchange will provide notices identifying which securities are eligible for tokenized trading and will notify members at least 30 days prior to the commencement of any transactions.
The SEC, in its approval, said the plan meets regulatory requirements designed to protect investors and maintain fair and orderly markets.
The Committee specifically cited Section 6(b)(5) of the Securities Exchange Act, which requires exchange regulations to prevent fraud, promote fair trading principles, and remove barriers to a free and open market.
According to the document, the securities with symbols should show the traditional levels of rights and opportunities, reducing the risk of price differences or investor protection.
The DTC pilot provides a blockchain-based trading system without introducing new market risks.
The approval shows the rising power of tokenization in regulated markets. Exchanges and infrastructure providers are increasingly exploring blockchain representations of common assets while staying within the boundaries of existing regulations.
Nasdaq has indicated that other tokenization options are being discussed and may require separate filings with the SEC.
