Filing: the SEC approved a Nasdaq rule change allowing some securities to trade in tokenized form; the new approach will be tested in an upcoming pilot program
Quick Take — Eligible participants will be able to settle trades in tokenized form during a pilot program operated by the Depository Trust Company.
Context & Ripple Effects
Nasdaq had already sought SEC permission for tokenized securities in its earlier rule-change proposal. The approval moves that effort from a requested framework toward a controlled test with the Depository Trust Company, making settlement operations—not merely token creation—the immediate focus.
The pilot is narrower than Nasdaq’s separate work with Kraken on a framework for round-the-clock tokenized stock trading, which also raised corporate-governance questions. That distinction matters: regulated tokenized settlement can be tested before a broader change to market hours or investor rights.
First-order effects
- Nasdaq can test tokenized-form trading for eligible securities under an SEC-approved rule, while eligible participants gain a defined route into the Depository Trust Company-operated pilot.
- The Depository Trust Company becomes the operational venue for testing how tokenized-form settlement works within established market infrastructure.
Second-order effects
- The approval creates a regulatory and operational benchmark for rival exchange initiatives, including the NYSE’s previously outlined blockchain-enabled tokenized-securities plans.
- Market participants building tokenized-security workflows will have reason to prioritize compatibility with incumbent exchange and depository processes, rather than treating tokenization as a standalone crypto-market product.
Third-order effects
- If the pilot works as intended, tokenized securities may develop first as an extension of regulated trading and settlement infrastructure, with access and controls shaped by incumbent market operators.
- The result will help determine whether broader ambitions such as continuous trading can be separated from—or must wait on—proof that tokenized settlement preserves the governance and post-trade functions of conventional securities markets.
The trend: Tokenized securities are moving from exchange and crypto-industry proposals toward supervised pilots embedded in established market-infrastructure institutions.