Nasdaq Pushes SEC to Approve Tokenized Stock Trading

Tokenization is no longer a fringe concept, as most market research reports project it to reach trillions of dollars in valuation in the coming decade. 

While the Security Token Market forecasts the asset tokenization market at $30 trillion by 2030, Ripple and BCG estimate it could reach $18.9 trillion by 2033. Such projected growth, combined with over $50 billion already tokenized in stocks, bonds, and real estate, has created a market opportunity too lucrative for traditional financial institutions to ignore.

Even the world’s second biggest stock market exchange, Nasdaq, finally made a move this week into the tokenization space. On September 8, 2025, Nasdaq filed a proposal with the Securities and Exchange Commission that could pave the way for tokenized stocks to be traded directly on its platform, right alongside their traditional counterparts.

This would be a major breakthrough for the broader tokenization market, as tokenized equities have so far been mostly limited to offshore crypto exchanges, offering no shareholder rights and limited transparency. 

On those platforms, the so-called “tokenized stocks” were usually synthetic products or contracts-for-difference issued by a third-party, not actual shares recorded in a company’s register. That meant investors could track the price of Apple (AAPL +1.25%) or Tesla (TSLA -3.4%), but they couldn’t vote, claim dividends, or rely on the protections that come with regulated US markets.

But that changes with the Nasdaq proposal, as investors would be able to request blockchain-based settlement by flagging their orders, while having 100% ownership over all rights and protections associated with conventional shares.

Nasdaq’s move also reflects the growing competition among countries to take the lead in the global tokenization market, as European and Asian exchanges have already surpassed the United States in terms of active tokenized securities. Deutsche Börse’s D7 platform and Switzerland’s SIX Digital Exchange, in particular, are widely recognized as among the most advanced.

Inside Nasdaq’s SEC Rule Change Proposal

Rather than opting for a standalone framework, Nasdaq will integrate tokenized equities directly into its existing mechanism. Doing so means both traditional securities and their tokenized versions would be treated the same in terms of trading, clearing, and oversight.

For that, Nasdaq seeks to amend Equity Rule 1, which will expand the definition of securities to include tokenized shares.

The proposal also includes changes to Equity Rule 4 that focus on the trading process itself. Nasdaq will introduce a new “tokenization flag” that investors or brokers can attach when entering orders. It would be a sign that the investor wants settlement in a tokenized format. The rest of the process, such as price-time priority, order matching, and routing, would remain unchanged.

Settlement would continue to go through the Depository Trust Company (DTC), the central clearinghouse for US equities. It would process both traditional and tokenized versions of the same stock.

Nasdaq has also proposed amendments to Equity Rule 4757 on book processing. These confirm that an order flagged for tokenized settlement would not gain or lose execution priority because of that designation. Matching will continue to follow price-time priority, ensuring that tokenized and traditional orders are treated equally.

In addition, Equity Rule 4758 on order routing would be updated. Under the proposal, if an order marked for tokenized settlement is routed to another venue, Nasdaq will carry the settlement instruction forward. Once the order is executed, Nasdaq will transmit the tokenization instruction to the Depository Trust Company, allowing the trade to settle in the format selected by the investor.

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Why Nasdaq’s Tokenized Stocks Proposal Matters

Nasdaq’s entry into tokenization represents a shift in how securities could be bought, sold, and settled in the US market. 

Faster Settlement

Right now, when you buy a stock, it takes two business days to actually settle, and while the SEC is already pushing for T+1, tokenized stocks could make settlement almost instant.

That might not be impressive for retail investors, but for big institutions moving billions of dollars around every day, this means they can deploy their capital faster and have fewer worries about deals falling through.

Transparency

Most stocks change hands behind closed doors, with clearing firms and back offices handling the details. But with blockchain, every transaction gets recorded on a public ledger that can’t be altered after the fact. This means regulators, auditors, and even investors themselves track the entire process.

Real Fractional Ownership

Fractional ownership is another area where tokenization could make a real difference. Although apps like Robinhood (HOOD +4.06%) do make it possible to buy fractional shares, that’s just clever tracking of who owns how much by the broker. So, anyone owning 0.1 share of Apple’s stock doesn’t really mean owning a piece of the broker’s Apple holdings.

Tokenization would change that by making fractional ownership real at the stock level itself. So, if Nasdaq gets approval for listing tokenized shares, investors won’t have to make do with broker-facilitated synthetic splits; they would own actual fractions of expensive stocks like Berkshire Hathaway, Apple, and many more directly.

Regulatory Clarity

Nasdaq’s formal offering of tokenized shares would open the floodgates of institutional investment, as it would end regulatory uncertainty, one of the major headaches preventing them from deploying billions. Everyday investors, too, would benefit from this, as they will see faster payouts after selling, fractional access to pricey shares, and full visibility into trades.

Challenges Facing Nasdaq’s Tokenized Stocks

While there are several benefits, there are also some downsides that must be discussed.

Legal Hurdle

The biggest challenge is getting past the SEC. It’s common knowledge that the Commission has been skeptical of anything crypto-related over the years, as evidenced by a steady stream of lawsuits against crypto firms. That has changed only recently, with pro-crypto Donald Trump winning the presidential elections.

So, just because Nasdaq is asking, the SEC is not going to give a green light to the proposal. They will demand proof that investors are protected, companies are disclosing everything they should, and that the technology actually works as intended.

And even after the SEC gives a nod, that would only be a start, as they will likely need to issue new guidance to clarify how tokenized settlement works within existing securities law. That process will require several years.

According to Nasdaq’s filing, the DTC infrastructure needed for tokenized settlement may not be available until the end of Q3 2026, and that’s still subject to regulatory review and approval.

Operational Complexity

Then there is the operational complexity of running two different systems at once. While Nasdaq is positioning the process of switching between regular settlement and blockchain settlement as seamless, it’s unlikely to be so.

The reality is that brokers will need to maintain dual infrastructure, which raises costs and risks that they would not otherwise have to tackle.

On the staff front, too, many upgrades would be necessary, with both the compliance and technology teams having to be trained on two separate processes. This could increase the chances of an error, which might open Pandora’s box of regulatory headaches and liability issues.

Security is another major concern. Traditional shares are held by regulated depositories with established safeguards, but tokenized shares depend on private key security, smart contract reliability, and blockchain uptime. Each of these introduces new vulnerabilities that don’t exist in the current system.

Fairness

There is also a question about fairness. While Nasdaq stresses that tokenized and regular shares will be identical, the reality is that access to instant settlement will likely depend on having the right technology and infrastructure.

Institutional investors with advanced systems will probably adopt tokenized settlement first, while many retail investors may stick with traditional two-day clearing. This will enable the fast-settlement crowd to redeploy capital immediately for new trades. That timing advantage, even if small, could accumulate into significant competitive benefits over time.

The result will be two classes of market participants: Fast & Slow, based purely on their technology capabilities, which will create the perception of unfair access.

The Future of Tokenized Stocks on Nasdaq

Nasdaq’s move could change everything for tokenized stocks. Until now, most blockchain-based stock trading has happened on dubious offshore platforms where investors have had no legal protection. Nasdaq wants to bring this into the legitimate US market, where the SEC can actually oversee it.

The benefits are pretty clear: faster trades, better transparency, real fractional shares, all in a system people already trust. However, there are also serious challenges that need to be addressed. The SEC has to decide if this fits existing rules, brokers need to run two systems at once, and the fairness problem needs to be solved.

Tokenized stocks will only work if they can actually improve things without screwing up what already works. Nasdaq’s proposal is the best shot so far, but it’s far from guaranteed to succeed.

Whether the SEC approves or sends them back to revise, one thing’s obvious: the fight over who controls tokenized markets has begun, and Nasdaq doesn’t want America falling behind.

Click here for a list of top tokenization platforms.