Nasdaq Seeks SEC Approval to List Tokenized Stocks

In a massive development, Nasdaq has filed with the U.S. Securities and Exchange Commission to enable the trading of tokenized stocks on its platform. This comes as companies look to tokenize their stocks, with Galaxy Digital among the first to make this move.

Nasdaq Files With SEC To List Tokenized Stocks

An SEC filing shows that the stock exchange has asked the Commission to let investors trade tokenized stocks on its platform. The exchange operator has filed a proposed rule change to amend the Exchange’s rules to enable the trading of securities on its platform in tokenized form.

In line with this, Nasdaq proposes the trading of these securities in either traditional form (without utilizing blockchain technology) or tokenized form (utilizing blockchain technology).

Furthermore, Nasdaq detailed how these tokenized stocks will trade, suggesting that they should trade similarly to traditional stocks if they have the same shareholder rights as the underlying security. The exchange operator also proposes to label these tokenized stocks as such, so that it is clear to market participants when they want to settle their trades.

It also proposes that tokenized stocks receive the same priority as traditional stocks when executing orders. Notably, this move comes just days after Galaxy Digital became the first Nasdaq-listed company to tokenize its common stock.

It is worth mentioning that the SEC has already clarified before now that tokenized stocks are still securities, suggesting that these kinds of stocks will still get the same treatment as traditional assets.

Meanwhile, the SEC had earlier launched ‘Project Crypto’ as part of plans to promote tokenization of stocks and bring the U.S. markets on-chain. As such, the move from Nasdaq might be one that the Commission is open to. Moreover, Paul Atkins’ administration has so far shown its willingness to promote innovation in the crypto space.

Notably, the SEC and CFTC plan to host a roundtable on September 29, where they will also discuss the possibility of 24/7 markets. The potential approval of Nasdaq’s proposed rule change could be one of the first steps towards achieving that.

What The Exchange Is Looking To Accomplish

Commenting on Nasdaq’s filing to list tokenized stocks and what they aim to accomplish, Senior Vice President of North American Markets Chuck Mack said that the proposed rule changes would enable member firms and investors to trade tokenized versions of stocks and ETFs on their platform.

He further remarked that their goal is to integrate digital assets into their current infrastructure and systems, which will “advance financial innovation while maintaining stability, fairness, and investor protection.”

Meanwhile, Mack revealed that Nasdaq’s move to list tokenized stocks is about responding to demand in some respects, as tokenization has the potential to benefit investors, issuers, and the economy. He added that blockchain technology can provide several “potential efficiencies, including faster settlements, improved audit trails, and a more streamlined flow from order to trade to settlement.”