SEC Approves Nasdaq Tokenized Securities Trading Pilot, Allowing Blockchain-Based Equities Under Existing Market Structure

Tokenized Stocks to Trade Alongside Traditional Shares With Identical Rights, Pricing, and Settlement Rules

TL;DR

• SEC approved Nasdaq’s rule change, enabling tokenized securities trading under a pilot program.
• Tokenized equities and ETFs will trade on the same order book with identical rights, pricing, and identifiers.
• Settlement remains at T+1, with optional tokenized processing handled through DTC infrastructure.

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The U.S. Securities and Exchange Commission on March 18, 2026 approved a Nasdaq rule change permitting the trading and settlement of tokenized securities, allowing blockchain-based representations of equities to operate within existing market infrastructure. The framework enables digital tokens representing traditional financial instruments to be traded without altering the legal status of the underlying assets, keeping them fully recognized as conventional securities under U.S. law. The approval establishes a structure where tokenized and non-tokenized securities coexist within the same regulated environment.

Nasdaq’s system will allow tokenized versions of equities and exchange-traded funds, initially focusing on securities included in the Russell 1000 index and major index-linked ETFs such as those tracking the S&P 500. These instruments will be fully interchangeable with their traditional counterparts and will not form a separate trading class. Both formats will be executed within the same central order book, ensuring that liquidity is not fragmented between digital and traditional representations of the same asset.

Tokenized securities will follow identical trading mechanics, including execution priority, pricing, and access to market data. The structure ensures that no preferential treatment is given to either format, maintaining consistency across all participants. The SEC stated that the framework meets requirements for “fair and orderly markets” and investor protection, addressing concerns about discrepancies that could arise from introducing blockchain-based instruments into regulated exchanges.

Each tokenized security must remain fully fungible with its traditional equivalent, carrying the same ticker symbol and CUSIP identifier while representing the same underlying share. Investors holding tokenized versions retain full shareholder rights, including voting privileges, dividend eligibility, and claims on residual assets in liquidation. This requirement ensures that tokenized equities function as direct digital representations of ownership rather than derivative or synthetic products.

The rollout will take place through a pilot program involving the Depository Trust Company, which will oversee clearing, settlement, and post-trade processing. Market participants can opt into tokenized settlement by flagging trades at the point of execution, introducing flexibility without mandating system-wide adoption. Transactions that do not meet tokenization criteria will default to traditional settlement processes, maintaining operational continuity across the exchange.

Nasdaq’s core trading infrastructure, including order types, routing logic, and trading sessions, will remain unchanged under the new framework. Regulatory surveillance systems will monitor tokenized and traditional securities using the same datasets and compliance tools, ensuring consistent oversight across both formats. Settlement timing will continue to follow the current standard of T+1, meaning trades finalize one business day after execution.

The approval integrates blockchain functionality into existing capital markets without introducing new trading venues or regulatory categories, embedding tokenization directly into established systems. The approach allows digital asset infrastructure to operate within traditional financial rails while preserving the legal and operational structure already in place for listed securities.

This article has been refined and enhanced by ChatGPT.