Nasdaq Secures SEC Approval to Transition Stocks Onchain, Indicating Wall Street’s Increasing Influence in Crypto Technology

The SEC’s approval of Nasdaq’s framework enables the integration of blockchain advantages into equities, while still maintaining traditional intermediaries and market structures, according to industry experts.

Key points:

• The SEC has given the green light for Nasdaq to trade specific tokenized stocks and ETFs on blockchain technology, in conjunction with conventional shares.
• This development is significant as it facilitates 24/7, worldwide access to U.S. equities, according to industry professionals.
• However, detractors argue that the framework maintains trading within a permissioned, intermediary-centric model, restricting the transformative capacity of tokenization compared to more advanced regions.

The SEC’s recent endorsement of Nasdaq’s tokenized securities framework signifies a crucial milestone for the future trading of stocks: it integrates blockchain into the central U.S. equity markets, albeit under traditional Wall Street conditions.

The regulatory approval permits Nasdaq to trial a system where specific stocks and ETFs can be issued and settled as blockchain-based tokens while coexisting with traditional shares. In practice, investors might possess tokenized versions of securities in digital wallets, with clearing and settlement managed by the Depository Trust & Clearing Corporation (DTCC).

Nonetheless, this initiative is not a comprehensive transformation of market operations; it primarily addresses post-trade processes.

DTCC executive Brian Steele indicated that the firm aims to develop “secure, reliable tokenization services to foster a more resilient, inclusive, cost-efficient, and effective financial system,” collaborating with exchanges and market players to enhance adoption.

Read more: Here is why Nasdaq and owner of NYSE are putting the $126 trillion equity market on blockchain

‘Major beneficiaries’

A principal motivation for Wall Street leaders to pursue the tokenization of stocks is the ability to provide traders with continuous trading opportunities.

Conventional equity markets function within set trading hours and depend on multi-day settlement periods. The creation of stock tokens on blockchain platforms introduces the possibility of near-instant settlements and, ultimately, around-the-clock trading.

Val Gui, general manager at Kraken’s tokenized stock platform xStocks, termed the approval “a definitive indication that the $126 trillion equity market will transition onto blockchain platforms,” envisioning a future where stock ownership is “available 24/7 and global.”

“This builds on the SEC’s collaboration with the DTC, and it’s a positive development,” stated Ian De Bode, president of tokenization company Ondo. “Advancements towards 24/7 markets, even in a permissioned format, are encouraging.”

“The primary beneficiaries will be global investors… who have historically been deprived of seamless, continuous access to U.S. equities,” he added.

To facilitate this connection, Nasdaq noted it is partnering with crypto exchange Kraken to distribute stock tokens internationally.

Wall Street maintains control

Nevertheless, Nasdaq’s framework does not replace the established financial system. It merely extends it to include onchain securities.

Tokenized shares will continue to trade through brokers and settle via DTCC, with blockchain primarily serving as an alternative ownership record.

“Nasdaq is effectively isolating the benefits of blockchain within the prevailing TradFi [traditional finance] framework,” remarked Maylea Ma, deputy general counsel at 1inch, a decentralized exchange (DEX) aggregator.

Investors may experience quicker settlements or enhanced ownership features, she noted, but only within a permissioned system that remains reliant on intermediaries.

“If tokenized equities cannot link to broader onchain liquidity and non-custodial execution, the efficiency improvements will be incremental rather than revolutionary,” Ma stated.

‘Still falling behind’

While this initiative represents a move towards the future of trading, the U.S. continues to lag behind other regions.

Jesse Knutson, head of operations at Bitfinex Securities, who has been involved in tokenized issuances in emerging markets such as Kazakhstan and El Salvador, noted that the approval shows regulatory progress but also emphasizes the significant distance U.S. efforts still have to cover.

“The adaptability of tokenization is what markets are truly seeking,” offering 24/7 trading, fractional ownership, real-time settlement, and self-custody capabilities, he explained.

In locations like Kazakhstan’s Astana International Financial Centre (AIFC) and El Salvador, regulators have already permitted the issuance and trading of tokenized securities with fewer legacy limitations, including more direct access for investors and blockchain-based settlement. Other regions such as Switzerland and the UAE have also acted more swiftly to create frameworks for the issuance and trading of digital assets, allowing firms the opportunity to innovate.

“It’s an encouraging step… but it remains a step behind more progressive regions,” Knutson remarked.

To be fair, U.S. regulators oversee the world’s largest and most dominant equity market — valued at approximately $62 trillion — which reduces the incentive and flexibility to overhaul existing systems in favor of newer blockchain-based approaches. Any amendments must integrate into a deeply rooted market structure focused on investor protection, intermediaries, and centralized clearing.

However, for the time being, the SEC’s ruling indicates a clear trajectory: Tokenization is on the horizon for public markets, and it will be initially influenced by the same institutions and regulations that currently govern them.