Nasdaq has submitted a formal request to the U.S. Securities and Exchange Commission to allow the trading of tokenized stocks on its platform. This proposed rule change would enable securities to be traded in either traditional format or tokenized format using blockchain technology. The initiative reflects a growing interest among companies to explore tokenization, with Galaxy Digital recently becoming the first Nasdaq-listed firm to tokenize its common stock.
Equal Treatment for Tokenized and Traditional Securities
In its filing, Nasdaq emphasized that tokenized stocks should be treated similarly to traditional stocks, provided they offer identical shareholder rights. The exchange proposes that tokenized securities be clearly labeled to help market participants identify them during trade settlement. Additionally, Nasdaq suggests that these digital assets receive the same execution priority as conventional stocks, ensuring a level playing field across both formats.
Regulatory Support and Future Outlook
The SEC has previously affirmed that tokenized stocks are considered securities, meaning they fall under existing regulatory frameworks. This clarification supports Nasdaq’s proposal and aligns with broader efforts to modernize financial markets. The SEC’s Project Crypto initiative and the upcoming joint roundtable with the Commodity Futures Trading Commission on September 29 signal a growing openness to blockchain-based innovation. The roundtable will also explore the feasibility of operating markets around the clock, a concept that could be accelerated by Nasdaq’s move.
Frequently Asked Questions (FAQs)
- What are tokenized stocks?
Tokenized stocks are digital representations of traditional shares, recorded and traded using blockchain technology.
- Will tokenized stocks have the same rights as regular stocks?
Yes, Nasdaq proposes that tokenized stocks maintain identical shareholder rights to their traditional counterparts.
- Is the SEC likely to approve Nasdaq’s proposal?
While not guaranteed, the SEC’s recent initiatives suggest a favorable stance toward tokenization and blockchain integration.
