SEC Greenlights Nasdaq Rule Change, Clearing Path for Tokenized Securities Trading in US Markets

The U.S. Securities and Exchange Commission (SEC) has approved Nasdaq’s long-awaited rule change, allowing tokenized versions of stocks and ETFs to trade alongside traditional shares on the exchange.

At its core, the change allows eligible participants to opt into tokenized settlement using a designated order flag, signaling that a trade should clear and settle in token form rather than through traditional book-entry systems. The mechanics may sound futuristic, but the exchange insists the experience will feel familiar—orders, routing, and execution remain unchanged.

Eligibility is intentionally narrow at launch. The pilot will focus on securities within the Russell 1000 Index and select exchange-traded funds tied to major benchmarks like the S&P 500 and Nasdaq-100. Nasdaq plans to publish updates identifying which assets qualify as the rollout progresses.

The SEC’s approval follows months of industry feedback that ranged from enthusiastic support to cautious skepticism. Some commenters flagged concerns about technical transparency, competitive fairness, and whether tokenized shares could diverge in price or rights from their traditional equivalents.

Regulators addressed those worries directly. To qualify, tokenized securities must be fully fungible with their traditional counterparts, carry the same CUSIP and ticker, and grant identical shareholder rights—including dividends, voting power, and claims on assets.

The Commission ultimately concluded that the proposal promotes fair and orderly markets while maintaining investor protections. It also stressed that tokenization must operate squarely within existing securities laws, not around them—a subtle but unmistakable boundary line.

Still, this is a pilot, not a full-scale reinvention. The infrastructure must be fully operational before launch, and Nasdaq will provide at least 30 days’ notice before tokenized trading goes live.

For now, the message is clear: tokenization has been invited into the club, but it’s expected to follow the house rules—no shortcuts, no special privileges, and certainly no rewriting the playbook overnight.