SEC advances Nasdaq's tokenized securities trading proposal, paving the way for a new phase of on-chain US capital markets

The U.S. Securities and Exchange Commission (SEC) has officially initiated the approval process for Nasdaq’s tokenized securities trading proposal, marking a significant step for mainstream US exchanges toward tokenized financial infrastructure. The proposal aims to allow Nasdaq-listed and traded tokenized securities, including stocks, sparking high market interest in the on-chain prospects of Real World Assets (RWA).

According to the latest order issued by the SEC, the regulatory agency is soliciting further public comments on Nasdaq’s proposed rule change to assess whether to approve their tokenized securities trading. The SEC noted that, due to the important legal and policy issues involved, launching a formal approval procedure is necessary and appropriate.

Currently, the SEC has received feedback from multiple parties. The Securities Industry and Financial Markets Association (SIFMA) expressed support for the proposal, believing that tokenization can help enhance market efficiency and transparency. However, there are opposing voices, including Cboe Global Markets, Better Markets, and Ondo Finance, mainly concerned with market structure, investor protection, and potential systemic risks.

Nasdaq has previously clarified its strategic direction regarding tokenization. Notably, Galaxy Digital has become the first Nasdaq-listed company to tokenize its common stock on the Solana blockchain, providing a real-world example for traditional stock on-chain.

From an industry perspective, securities tokenization is believed to significantly shorten settlement cycles, improve trading transparency, and reduce operational costs. However, the SEC also emphasizes that any new mechanism for trading tokenized securities must strictly comply with existing securities regulations and have sufficient safeguards against fraud, market manipulation, and technical failures.

At the critical infrastructure level, the SEC has sent a no-action letter to the Depository Trust & Clearing Corporation (DTCC) and its subsidiary, the Depository Trust Company (DTC), allowing them to tokenize certain custodial assets. This implies that if Nasdaq’s proposal is approved in the future, relevant tokenized securities could be cleared and settled within the DTC system, which is seen as a key prerequisite for final implementation.

Meanwhile, the U.S. Commodity Futures Trading Commission (CFTC) is also advancing regulatory innovation, having launched a pilot program that permits certain tokenized assets to be used as compliant collateral in the U.S. derivatives markets.

Overall, the SEC’s progress on Nasdaq’s tokenized securities proposal, combined with policy developments at DTCC and CFTC, indicates that U.S. regulators are taking a cautious yet open approach, gradually paving the way for the integration of traditional finance with blockchain technology.