On March 18, 2026, the U.S. Securities and Exchange Commission (SEC) approved a proposal from Nasdaq to allow certain stocks and exchange-traded products to be traded and settled in tokenized form. Under the approved rule change, originally filed by Nasdaq in September, the exchange can now support trading of eligible securities in either their conventional format or as blockchain-based digital tokens. Settlement for these tokenized trades will occur through the existing infrastructure of the Depository Trust Company (DTC), ensuring continuity with current market processes while introducing on-chain elements. There is a lot to digest here.
Let us explain.
Initially, tokenized trading will be limited to stocks included in the Russell 1000 Index, as well as ETFs that track major benchmarks like the S&P 500 and Nasdaq 100. Investors can choose to trade these high-volume assets as traditional shares or as tokenized versions, with the tokenized form enabling features such as faster, more efficient settlement via distributed ledger technology.
What are the benefits of tokenized security trading?
The advantages include fractional ownership for greater accessibility, near-instant and lower-cost transfers (compared to traditional T+1 or T+2 settlement), improved liquidity for previously illiquid assets, programmable features via smart contracts (e.g., automated dividends or compliance), 24/7 global trading, and enhanced transparency through immutable records.
What else is different about tokenized securities?
Security tokenization is the conversion of traditional financial instruments, like stocks, bonds, or fund shares, into digital tokens on a blockchain or distributed ledger. These tokens serve as transparent, immutable records of ownership, rights, and transactions, effectively bridging traditional finance (TradFi) with blockchain capabilities. Tokenization alters the operational “plumbing” (format and recordkeeping). Tokenized securities typically follow one of two models:
- Issuer-sponsored tokenization, where the issuing company or fund directly integrates blockchain into its ownership records, creating native digital securities.
- Third-party tokenization, where an independent entity (often a custodian) holds the underlying asset and issues tokens representing that security, similar to wrapped assets.
What are other exchanges doing?
NASDAQ rival Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE), announced earlier in 2026 that it had developed its own platform for trading and on-chain settlement of tokenized securities, for which it is also pursuing regulatory approvals.
Are the rules different?
No. The SEC has indicated that security format changes to tokenization do not eliminate obligations. In the U.S., tokenized securities must still adhere to registration or exemption requirements under the Securities Act, Exchange Act reporting, and rules for broker-dealers and investment companies.
Conclusion.
Overall, Nasdaq’s SEC approval signals accelerating adoption of tokenization in 2026, shifting from experimental phase to practical implementation by major institutions, driven by clearer regulations and potential efficiency gains. Nasdaq’s move aligns with broader industry efforts to integrate blockchain into mainstream finance.
