Nasdaq’s Application to Trade Tokenized Stocks — Can It Succeed?

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#Nasdaq #Tokenized #Crypto

Reuters reports that Nasdaq has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) seeking rule changes that would allow securities listed in traditional digital or tokenized form to trade on the Nasdaq exchange.

In its filing to the SEC, Nasdaq voiced an issuer-centric concern: “Nasdaq believes that the tokenization of securities should not deprive issuers of the right to determine where and how their shares trade.” The document also notes that Nasdaq has limited ability when it comes to granting issuers such a choice.

Nasdaq President Tal Cohen said the company hopes to “build a bridge between the digital-asset world and traditional assets.” He also wrote on LinkedIn: “The challenge and responsibility is to ensure that this transformation always puts investors’ interests first.”

This is, without question, a deep-sea torpedo that caught everyone off guard. Why such a strong market reaction? Simply put:

• It’s no longer small brokers or crypto platforms testing at the margins — it’s Wall Street’s “cathedral of tech stocks” embracing blockchain.
• For the first time, TradFi and the Web3 world are converging at the level of the “regular army.”

So the question is: Can Nasdaq truly open the “tokenized securities” door? What are its motives, implications, and challenges? And what opportunities might crypto investors find here?

Below, we break down this historic move from multiple angles.

Key Points in Nasdaq’s Proposal (per the public filing)

1) Tokenized securities treated on par with traditional stock

Whether ordinary shares or tokenized shares, orders would go into the same order book and follow the same trading rules. In other words, tokenized Tesla or Microsoft that investors buy would carry no difference in shareholder rights versus the conventional stock. Dividends, voting, shareholder meetings — all identical.

This sends a crucial signal: tokenization is not a “substitute” but a digitized version of the same regulated security.

In the past, crypto markets popularized “tokenized Tesla” or “tokenized Apple” mainly as synthetic assets, typically backed by platform collateral and tracking price via derivatives. Those tokens were not stock; holders lacked shareholder rights and merely got price exposure.

By contrast, Nasdaq’s tokenized securities proposal would write shareholder rights into the product’s rule framework. That means a buyer of tokenized Microsoft is fully equal to a buyer of regular Microsoft stock. This is true, compliant security tokenization.

For the broader crypto market, that implies a major step up in legitimacy and trust.

2) A “dual-track” settlement model

Order entry and matching would remain on existing infrastructure, but settlement could use on-chain tokens. Ultimately, the Depository Trust Company (DTC) and the established clearing system would still provide the backstop.

This is a transitional design. In traditional finance, clearing and custody are the core systemic-risk touchpoints. Rather than rushing into “disintermediation,” Nasdaq proposes a two-sword approach:

• Matching: Keep the mature, proven matching engine for stability.
• Settlement: Introduce a blockchain tokenization option to boost efficiency and flexibility.
• Risk backstop: DTC and other clearing institutions remain the ultimate safety net.

The dual model satisfies regulators’ safety priorities while letting investors experience blockchain benefits.

For cross-border investors in particular, tokenized settlement could compress settlement cycles from T+2/T+1 toward T+0, a huge leap in liquidity and trading experience.

3) Earliest go-live: 2026

If all goes well, U.S. investors could see the first batch of tokenized stocks trade on Nasdaq’s main board as early as Q3 2026.

Why 2026?

A. Lengthy regulatory review.
The SEC’s process includes rigorous review, public comment, industry hearings, and rule amendments — typically 18–24 months at minimum.

B. Technical integration.
Marrying blockchain with existing market plumbing isn’t just “add a chain.” Account models, KYC/AML, custody, and more require careful re-architecture.

C. Market education.
Investors — especially traditional institutions — need time to understand “tokenized stock.” Nasdaq must roll out rules, education, and outreach progressively.

In other words, 2026 is actually ambitious. If achieved, it would mark a sweeping endorsement of tokenization by traditional finance.

Why This Is Epoch-Making

A. Shareholder rights go on-chain for the first time.

Investors wouldn’t just trade stock prices on a chain; on-chain identity could carry dividends, voting, and governance. In time, smart contracts could even automate shareholder meeting outcomes.

B. Lower barriers for global investors.

Imagine an investor in a small African town using a crypto wallet to directly hold shares of a Nasdaq-listed company — without convoluted cross-border account opening.

C. A compliant regulatory framework takes shape.

If approved, Nasdaq’s blueprint becomes a template. The NYSE, Cboe, and even Asian venues (HKEX, SSE) could follow.

D. Faster TradFi–Web3 fusion.

Two previously siloed worlds — securities markets and crypto — gain a tokenization bridge. For Web3, the design space explodes.

E. Liquidity reshaped.

Tokenized stocks could ultimately offer 7×24 trading like crypto spot. The classic open-close rhythm of TradFi may be rewritten — very familiar terrain for crypto traders.

F. A bigger investable universe.

Crypto investors wouldn’t be limited to BTC/ETH/altcoins; they could buy tokenized Tesla or Coca-Cola directly. That reshapes capital flows and asset allocation.

G. A true RWA bridge.

RWA used to be a buzzword. Putting tokenization on one of the world’s biggest exchanges moves it from the edge to the center.

The Challenges to SEC Approval

Intense regulatory scrutiny.

The SEC won’t greenlight this lightly. Expect comment rounds and industry debate. Traditional powerhouses like Citadel have already warned about potential regulatory-arbitrage risks.

Mixed issuer attitudes.

Many listed companies may not want their shares tokenized. Recall that when Robinhood listed an OpenAI tokenized stock, OpenAI quickly distanced itself.

Technology and security

On-chain settlement must interoperate with today’s clearing rails. Any flaw could be amplified. With quantum computing inching closer, security sensitivity only rises.

Incumbent interests.

Legacy brokers and market-makers may resist trends that disintermediate them and threaten entrenched revenue streams.

Conclusion: Finance’s “2026 Moment”?

If the SEC ultimately approves, 2026 could be a turning point in financial history:

• Tokenized stocks enter the main board — true convergence of TradFi and blockchain.
• Investors gain faster, more convenient, and more global trading.
• Crypto gets the strongest endorsement it has ever seen.

Risks remain: regulatory tug-of-war, technical security, and redistribution of economic rents. None of these resolve overnight. But regardless of outcome, Nasdaq’s application has already sent the clearest signal yet:

Blockchain is no longer “alternative” — it is the direction of finance.