Nasdaq Proposes Tokenized Stocks for U.S. Exchange Trading

Real-world asset tokenization is on the brink of becoming a reality. On Monday, the exchange filed a proposal with the Securities and Exchange Commission (SEC) to allow tokenized versions of stocks and ETFs to trade alongside their traditional counterparts on its main market.

If Nasdaq gets the nod from the Commission, it would mark the first time tokenized securities are traded on a U.S. exchange, setting a precedent for blockchain-based settlement inside the national market system.

The proposal outlines that tokenized shares must carry the same rights and privileges as the underlying assets to qualify for unified trading and execution priority, and comes just days after the SEC added crypto trading rules to its regulatory framework. 

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Reuters reports that Nasdaq is trying to set the precedent for offering tokenized assets while maintaining shareholder rights. The exchange cited concerns over how the same type of trading is happening in European grounding, asserting that platforms are offering tokenized securities to inventors, without providing material shares of these companies. 

"The exchange will not treat tokenized instruments to be equivalent to their traditional counterparts if they do not convey such rights, in whole or in material part,” Nasdaq reported, as shared by Reuters. “But instead, the exchange will treat these instruments as distinct." 

The move reflects a broader sentiment to link traditional finance with the digitalization of currencies and assets. Firms like JPMorgan, Bank of America, Ripple, and Coinbase are heavily invested in RWAs, exploring how blockchain technology can streamline settlement AND reduce counterparty risks.

If the SEC approves the proposal, trade settlements happening on-chain could revolutionize the way U.S. markets handle post-trade operations.