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Nasdaq proposes trading tokens tied to stocks and ETPs

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If approved, move would mark first instance of tokenized

securities trading on a US exchange

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Nasdaq files proposal days after SEC agenda adds crypto

trading

rules

By Anirban Sen

NEW YORK, Sept 8 (Reuters) - Nasdaq is working

with U.S. regulators to introduce trading of tokenized

securities, becoming the latest major financial player on Wall

Street to double down on a boom in tokenization amid an easing

of crypto regulations under the Trump administration.

If approved, the move would mark the first instance of

tokenized securities being allowed to trade on a major U.S.

stock exchange, and also signify the most ambitious attempt yet

by an exchange operator to bring blockchain-based settlement

into the national market system.

Nasdaq on Monday filed a proposal with the U.S. Securities

and Exchange Commission to tweak its rules to allow for trading

of listed stocks and exchange-traded products on its main market

in "either traditional digital or tokenized form."

The filing comes days after the SEC unveiled its rulemaking

agenda, which included a potential amendment of its rules to

allow for crypto to be traded on national securities exchanges

and alternative trading systems.

The latest developments come as investor demand for

tokenized assets is rising globally. Proponents of the crypto

industry have argued that tokenization can improve liquidity in

the financial system.

Coinbase, the largest U.S. crypto exchange, has also

previously sought permission from the SEC to offer "tokenized

equities" to its customers. Some major global banks, including

Bank of America ( BAC ) and Citi have said they could explore launching

tokenized assets, including stablecoins.

In its filing on Monday, Nasdaq said it believes the markets

can use tokenization while "continuing to provide the benefits

and protections of the national market system."

"Wholesale exemptions from the national market system and

related protections are neither necessary to achieve the goal of

accommodating tokenization, nor are they in investors' best

interests," Nasdaq said.

Some critics of the industry have warned that the frenzy

around tokenization could introduce new systemic risks,

especially in the absence of stringent regulation. In July,

Hester Peirce, a commissioner at the U.S. Securities and

Exchange Commission who has frequently spoken positively about

cryptocurrency, said tokenized securities would not be able to

circumvent existing securities laws.

In its filing, Nasdaq referred to Peirce's earlier statement

and said its latest proposal to trade tokenized securities would

exist within that context.

'SAME MATERIAL RIGHTS'

The term "tokenization" is used in a variety of ways, but

generally refers to the process of turning financial assets -

such as bank deposits, stocks, bonds, funds and even real estate

- into crypto assets.

Under new SEC chair Paul Atkins, the SEC has been attempting

to revamp cryptocurrency regulations and reduce rules Wall

Street has criticized as being overly burdensome. If the latest

policies are adopted, they would represent a major win for the

digital asset industry, which has long pushed for tailored rules

that would enable crypto to become more enmeshed with

traditional finance.

On Monday, Nasdaq pointed out that trading of tokenized

stocks in Europe is taking place in a way that is "raising

concerns" as some trading platforms are offering investors

access to tokenized U.S. equities, but they are not providing

investors with actual shares in companies.

As part of its new proposal, Nasdaq argued it would raise

the bar for tokenized securities to have "the same material

rights and privileges as do traditional securities of an

equivalent class." If those conditions are met, then Nasdaq will

trade tokenized securities together with traditional securities

"on the same order book and according to the same execution

priority rules," it said.

"The exchange will not treat tokenized instruments to be

equivalent to their traditional counterparts if they do not

convey such rights, in whole or in material part... but instead

the exchange will treat these instruments as distinct," Nasdaq

added.

If Nasdaq's proposal is approved and once the central

clearing agency's infrastructure is live, investors could buy a

share on Nasdaq and have it settle in token form without

changing how orders are routed, priced, surveilled, or reported.

U.S. investors could see the first token-settled trades of

securities by the end of the third quarter of 2026, assuming the

Depository Trust Company's infrastructure is in place by then,

Nasdaq said.