March 18, 2026 — The US Securities and Exchange Commission (SEC) has officially approved Nasdaq’s rule amendment proposal, allowing eligible securities to be traded and settled on the exchange in the form of blockchain tokens. This move is far more than a simple technical upgrade; it marks the formal integration of blockchain technology from its crypto-native origins into the foundational infrastructure of the US mainstream stock market. With the Depository Trust Company (DTC) deeply involved, a new era of "asset tokenization" driven by traditional financial institutions is underway. On-chain data shows that the scale of tokenized stocks has grown from early-stage experimental projects to over $4 billion, making it one of the fastest-growing segments in the real-world asset (RWA) space.
What Structural Changes Are Happening Now?
The core of the SEC’s approval is that Nasdaq can, under the DTC’s tokenization pilot framework, conduct "dual-track" trading for certain securities. This means that constituents of the Russell 1000 Index and select mainstream ETFs can be settled in tokenized form by qualified participants, all while retaining their traditional stock codes and CUSIP numbers. The key change isn’t the creation of a new asset, but the addition of an "on-chain circulation layer" for existing highly liquid assets. Previously, tokenized stocks were mostly issued by private platforms, resulting in fragmented liquidity. Now, they are formally included in the National Market System (NMS) regulatory framework. With this structural shift, the tokenized stock segment within the RWA space has rapidly expanded. By mid-March 2026, it surpassed $4 billion, representing a leap in scale compared to the early days when it was only a few hundred million.
How Does the Settlement Mechanism Bridge Tradition and Innovation?
The pilot’s success hinges on its hybrid settlement mechanism, designed to be compatible with both existing regulatory systems and blockchain technology. Trading still takes place on the Nasdaq trading center, following the same order book priorities and trading rules. The change occurs in the backend: qualified participants can use specific markers when placing orders to direct trades into DTC’s blockchain tokenization pilot for settlement. As the core clearinghouse of the US securities market, DTC records transaction information on a distributed ledger while maintaining the T+1 settlement cycle. The brilliance of this design is that it doesn’t require market participants to overhaul their trading systems. Instead, it embeds an "optional on-chain channel" within existing processes, enabling a preliminary fusion of traditional financial settlement efficiency and blockchain transparency. DTC had previously received SEC approval to develop tokenization services, and Nasdaq’s rule approval marks a critical step in deploying this infrastructure.
What Are the Costs of This "Dual Circulation" Structure?
While the "two birds with one stone" approach offers flexibility, the coexistence of traditional and tokenized stocks inevitably brings structural costs. The primary concern is potential liquidity fragmentation and pricing friction. Although both channels theoretically share the same order book, tokenized settlement may attract capital seeking 24/7 trading or on-chain portfolio management, while traditional settlement retains institutional investors’ familiar workflows. This split may not cause significant price differences at first, but during extreme market volatility, differences in settlement efficiency and funding costs between the two channels could lead to temporary pricing deviations. Technical compatibility costs also matter. Participants need compatible blockchain wallets and DTC-recognized qualifications, raising the entry barrier. Trades that don’t meet these requirements automatically revert to the traditional settlement path, adding operational complexity.
What Does This Mean for the Crypto and Web3 Industry Landscape?
For the crypto industry, Nasdaq’s move fundamentally changes the narrative around the RWA space. Previously, RWA growth relied mainly on private issuers "porting" assets like US Treasuries and gold onto public blockchains—a bottom-up, market-driven approach. Nasdaq’s pilot represents a top-down structural injection: core assets from traditional finance are tokenized directly within a regulated framework. This shift is evident in market size—tokenized stocks have jumped from $1 billion to $4 billion in just a few months, a growth that previously took years. Meanwhile, the SEC and CFTC recently issued joint guidance on crypto asset classification, clearly defining tokenized securities as "digital securities," resolving legal ambiguities and paving the way for their inclusion in existing regulatory frameworks. Going forward, Web3 infrastructure—public chains, wallets, DeFi protocols—must consider how to connect with this "orthodox" tokenization system led by DTCC and Nasdaq, rather than developing in parallel.
How Might the Future Unfold?
Based on the current structural design, two clear development paths emerge. In the short term, settlement efficiency will gradually improve. As the DTC pilot matures, the market will assess whether tokenized settlement reduces operational risk and shortens reconciliation cycles. If successful, T+1 settlement could be compressed further, possibly enabling T+0 or 24-hour rolling settlement in the future. In the medium term, asset coverage will expand. The pilot is currently limited to Russell 1000 constituents and mainstream ETFs. If it runs smoothly, it could extend to corporate bonds, municipal bonds, and broader equity markets. The SEC chair recently predicted that US markets could achieve full on-chain integration within a few years—a projection grounded in the current pace of infrastructure evolution. Additionally, issuer-led equity tokens may emerge, giving listed companies greater flexibility in managing their shares.
Where Are the Risks and Boundaries?
Despite the promising outlook, the pilot has clear risk boundaries. First, there’s the risk of regulatory reversibility. The pilot is explicitly limited to the DTC’s pilot period and relies on SEC no-action letters. If technical failures, settlement errors, or compliance issues arise, regulators can halt the program at any time. Second, there’s technical dependency risk. The specific blockchain protocols, smart contract security, and cross-chain interoperability chosen by DTC and Nasdaq could become sources of systemic risk. If the underlying chain becomes congested or suffers an attack, it could impact the stability of traditional securities settlement. Lastly, there’s market acceptance risk. Whether institutional investors are willing to migrate large assets on-chain depends on cost, efficiency, and legal certainty. If initial participation is low, tokenization may remain a marginal "optional channel," failing to achieve scale.
Summary
The SEC’s approval of Nasdaq’s tokenized securities trading pilot marks the transition of the RWA space from "edge innovation" to "core integration." By bringing Russell 1000 stocks into DTC’s blockchain settlement system, the US capital market is testing the boundaries of on-chain asset efficiency without undermining its regulatory foundation. The scale of tokenized stocks has surged from $100 million to $4 billion, reflecting both market endorsement and a preview of future large-scale digital migration of traditional assets. For the crypto industry, this is both a challenge—adapting to tokenization standards set by traditional finance—and an opportunity, as a multi-trillion-dollar asset class gradually opens to on-chain ecosystems.
FAQ
Q1: How are the tokenized stocks approved by Nasdaq different from the "tokenized stocks" previously listed on crypto exchanges?
A1: The core difference lies in issuance and settlement compliance. Previous tokenized stocks offered by many platforms were derivatives issued by private entities based on price pegs, and were not part of the mainstream US securities clearing system. In contrast, the tokenized stocks in Nasdaq’s pilot are cleared and settled by DTC under SEC regulation, share the same CUSIP number and order book as their traditional counterparts, and grant equal shareholder rights.
Q2: Can retail investors directly participate in Nasdaq’s tokenized stock trading?
A2: Currently, participation in the pilot is limited to "DTC qualified participants," mainly eligible institutions. Retail investors cannot directly trade these stocks in tokenized form on Nasdaq yet. However, as infrastructure improves and rules are refined, indirect participation via brokers may become possible in the future.
Q3: What role does DTCC play in this tokenization pilot?
A3: The Depository Trust Company (DTC), part of DTCC, is the core settlement infrastructure provider for this pilot. It receives transaction information from Nasdaq and completes on-chain recording and settlement within its approved blockchain tokenization pilot program. In short, Nasdaq handles trade matching, while DTC is responsible for clearing and ledger recording.
