PREDICT BITCOIN
The U.S. Securities and Exchange Commission (SEC) has approved a Nasdaq rule change that allows certain securities to be traded in tokenized form, a move that integrates blockchain technology into traditional stock market infrastructure.
The approval, issued Wednesday, is part of a broader effort to explore digital representations of regulated assets while maintaining investor protections and market stability.
Under the new framework, eligible securities — including stocks in the Russell 1000 Index and exchange-traded funds (ETFs) tracking major benchmarks such as the S&P 500 — can be represented and traded as tokenized assets on Nasdaq.
These tokenized versions are fully interchangeable with traditional shares, sharing the same ticker symbols, CUSIP numbers, and shareholder rights.
Investors holding tokenized securities retain standard protections, including voting rights, dividend access, and claims on residual assets, ensuring consistency with existing securities laws.
The system operates as a pilot program through the Depository Trust Company (DTC), which handles post-trade settlement and tokenization. Market participants can choose to settle trades in tokenized form via a designated instruction at order entry.
Earlier this month, Nasdaq partnered with Payward, Kraken’s parent company, to enable the trading of tokenized stocks between traditional markets and blockchain networks using Payward’s xStocks platform.
A nod to Bitcoin
This move won’t directly affect Bitcoin’s price or network, but it’s a nod to a growing regulatory comfort with blockchain-based assets, which could indirectly boost institutional interest in digital currencies.
By integrating tokenized securities into mainstream markets, it may pave the way for broader adoption of crypto infrastructure and financial products that interact with Bitcoin.
If tokenization requirements are not met, trades default to traditional settlement. Nasdaq confirmed that its core trading infrastructure — including order types, routing strategies, trading sessions, and market data feeds — remains unchanged, ensuring tokenized securities are fully integrated into existing systems.
Settlement continues on a T+1 basis, aligning tokenized trading with current standards.
Nasdaq emphasized that a tokenized share and its traditional counterpart will trade on the same order book, with identical execution priority and market data treatment. Surveillance systems will monitor both forms of the security using the same underlying data, accessible to both Nasdaq and FINRA.
The exchange will issue alerts identifying which securities are eligible for tokenized trading and will notify members at least 30 days before launching any tokenized instruments.
The SEC, in its approval, said the proposal meets regulatory requirements designed to protect investors and maintain fair and orderly markets.
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.
According to the document, tokenized securities must mirror traditional shares in rights and privileges, limiting the risk of divergence in value or investor protections.
The DTC pilot provides a controlled framework for blockchain-based trading without introducing new market risks.
The approval reflects growing momentum toward tokenization in regulated markets. Exchanges and infrastructure providers are increasingly exploring blockchain representations of conventional assets while remaining within the bounds of existing law.
Nasdaq has indicated that alternative tokenization methods are under discussion and would require separate filings with the SEC.
