Nasdaq seeks SEC nod for tokenized stock trading

The push to let tokenized stocks trade along traditional securities has just gotten major Wall Street cred, with the Nasdaq seeking permission from the Securities and Exchange Commission to let investors trade tokenized versions of listed securities on its main bourse.

If approved, that would mark the first time tokenized assets trade on a major US exchange and a notable test of blockchain inside the national market system.

The move comes amid a broad loosening of crypto regulations under the Trump administration, prompting more traditional finance firms to support and even take steps to participate in tokenization.

Read more: Money funds take major leap in tokenization deal, JPMorgan says

In a filing Monday, the New York-based exchange operator proposed rule changes that would let stocks and exchange-traded products trade “in either traditional digital or tokenized form.”

Nasdaq’s submission landed just after the SEC outlined a rulemaking agenda that included potential amendments to allow crypto to trade on national exchanges and alternative trading systems.

Nasdaq’s plan would have tokenized shares trade alongside their traditional counterparts when – and only when – those tokens carry the same material rights as the underlying securities. Where rights aren’t equivalent, tokenized instruments would be treated as distinct.

The exchange also outlined labeling protocols so that participants and the Depository Trust Company can route, clear and settle as intended, with equal execution priority to traditional assets.

“Wholesale exemptions from the national market system and related protections are neither necessary to achieve the goal of accommodating tokenization, nor are they in investors’ best interests,” Nasdaq said in its filing, as reported by Reuters.

Chief financial officer Sarah Youngwood framed the approach as incremental rather than disruptive. “The solution, which is detailed in the proposal, is simple, leverages the current infrastructure, and market structure,” she said at a Barclays conference, according to Bloomberg.

If the SEC approves the rule change and DTC’s systems are ready, Nasdaq said investors could see the first token-settled trades by the end of the third quarter of 2026, without altering how orders are routed, priced, surveilled or reported.

The proposal arrives as tokenization pilots proliferate globally and some platforms in Europe offer access to tokenized US equities without conferring actual share ownership – a model Nasdaq flagged as “raising concerns.”

Read more: Robinhood in talks with regulators over tokenized US equities

Crypto exchange giant Coinbase has previously asked the SEC to permit tokenized equities, and several large banks have said they’re exploring tokenized assets, including stablecoins.

Regulatory winds also appear to be shifting. Under new chair Paul Atkins, the SEC has signaled work on clearer digital-asset guidelines, even as officials emphasize that tokenized securities must comply with existing securities laws. Commissioner Hester Peirce said in July that tokenized products cannot sidestep those rules.

Peirce reiterated that stance in an August interview with Bloomberg, during which she emphasized the need for firms to properly disclose the nature of the assets being tokenized.

Meanwhile, market participants are urging regulators to put up hard guardrails and clear rules of the road. Citadel Securities has raised concerns about regulatory arbitrage if the SEC doesn’t draw clear lines for tokenizing companies, while a JPMorgan note to clients suggested broad adoption in tokenizing bonds and other assets has lagged, with activity led by crypto-native firms rather than traditional institutions.

Nasdaq president Tal Cohen said the firm aims to “bridge the gap between the digital-asset and traditional-asset worlds,” adding that the “challenge – and the responsibility – is to ensure that this transformation is grounded in investor-first principles.”