Nasdaq has received approval for a pilot program on tokenized stock through the U.S. Securities and Exchange Commission (SEC). The tokenized stocks will now be listed alongside the conventional securities on the Nasdaq exchange, and this will give investors new opportunities.
In September 2025, Nasdaq submitted a proposal to the SEC to allow trading of tokenized stocks. The SEC approved the proposal on Wednesday, allowing the pilot program to include top stocks from the Russell 1000 Index, as well as exchange-traded funds (ETFs) linked to the S&P 500 and Nasdaq-100 indices. Tokenized stocks will trade alongside traditional ones, using the same ticker and carrying identical identifying numbers and rights.
The SEC approved it following feedback on concerns regarding market surveillance and the possibility of price differences. The plan of Nasdaq was changed to make it clearer how market surveillance would be, so that tokenized stocks would be under the same rules as traditional securities.
Eligible participants and trading process
According to the SEC filing, only ‘eligible participants‘ would participate in the pilot program and may decide to trade tokenized stocks or traditional stocks. Nasdaq has collaborated with Depository Trust Company (DTC) that will take care of the clearing and settlement of tokenized trades. Although the pilot will only have a few participants, the program is designed to try out tokenized stocks in addition to traditional ones on Nasdaq.
The main advantage of tokenization is the faster settlement times enabled by blockchain. Tokenized stocks can be settled more quickly than traditional ones, potentially leading to a more efficient trading environment.
Additionally, tokenized stocks will offer the same rights as traditional stocks, including dividends and voting rights, making them a fully comparable alternative to regular equities.
Nasdaq’s partnership with Kraken
Besides the approval by the SEC, Nasdaq has also been prolific in establishing partnerships to continue creating tokenized stocks. Nasdaq had partnered with the crypto exchange Kraken earlier this month, as Coin Headlines reported. This collaboration will enable Nasdaq customers to transfer securities across Nasdaq infrastructure to tokens, which can be used more flexibly on blockchain networks.
The collaboration with Kraken is part of Nasdaq’s broader strategy to enable public companies to issue their own tokenized shares. The action will lead to greater access to tokenized equities and more connection between conventional financial markets and the expanding digital asset ecosystem.
Moreover, Nasdaq is not the only major exchange exploring tokenized stocks. As previously reported, The New York Stock Exchange (NYSE), owned by Intercontinental Exchange (ICE), has also shown interest in tokenization. ICE has invested in the crypto exchange OKX to release tokenized stocks.
Despite the fact that Nasdaq has passed its pilot program approved by the SEC, it remains difficult to predict the future of the tokenized stock. Traditional financial institutions have raised concerns regarding the necessity to have more robust regulatory frameworks to solve the special challenges of securities in blockchain.
Nevertheless, the fact that the SEC approved the pilot program is an indication that there is a move towards increased innovation in the financial sector. SEC Chairman Paul Atkins has also indicated that the agency plans to seek public comment on potential exemptions for certain crypto-related securities.
Analysts’ Reactions and Industry Commentary
The announcement of the Nasdaq tokenized stock trading pilot has had diverse effects to market analysts and other players in the industry. Analyst Nate Geraci put emphasis on the importance of this approval saying,
“SEC approves Nasdaq’s proposal to enable trading of certain stocks & ETFs in tokenized form… World’s second-largest exchange. It’s happening.”
Geraci’s comment underscores the importance of this move as Nasdaq steps into the world of tokenized assets.
Another user, Justik_sol, commented,
“This is massive. Traditional finance and blockchain finally merging at the institutional level. The gates are wide open now.”
This statement speaks to the growing optimism surrounding the merger of traditional finance (TradFi) and decentralized finance (DeFi), with Nasdaq’s approval marking a major milestone.
What are tokenized stocks?
Tokenized stocks are tokens on the blockchain that denote exposure to traditional stocks. These tokens are usually created according to the price of the underlying asset such that they increase and decrease in value in accordance with the actual stock price. In order to issue tokenized stocks, an issuer typically buys the underlying shares of a company and places it as collateral in custody and issues corresponding tokens on a blockchain platform like Ethereum or Solana.
Tokenized stocks are a subset of the wider trend of real-world asset (RWA) tokenization, an attempt to use standard tokens on the blockchain, such as stocks, bonds, and real estate. These tokens provide a number of benefits when compared to the traditional trading of stocks and these benefits are: The settlement period is faster and also 24/7 trading.
However, not every tokenized stock is the direct legal ownership of the company. Others can just give price exposure or mimic the movement of stocks using derivatives.
How tokenized stocks work
Tokenized stocks operate by creating a blockchain-based token that reflects the value of specific equities. These tokens can be created in two main ways:
- Custodial-backed tokens: A regulated institution holds the underlying shares in reserve and issues corresponding tokens on the blockchain. These tokens may represent a claim on the shares, subject to the issuer’s legal structure and disclosures.
- Synthetic or derivative tokens: These tokens replicate the price movements of the stock through financial instruments or smart contracts, without directly owning the underlying asset.
When you buy a tokenized stock, the blockchain network carries out the exchange instead of a stock exchange. Smart contracts are applied to tokenized stocks and mandate the creation and destruction of tokens to apply rules. Moreover, when compared to conventional stocks, tokenized stocks can be traded any time of the day, rather than being confined to the exchange hours.
Conclusion
The tokenized stock trading pilot approved by Nasdaq SEC is a milestone in the implementation of blockchain technology in the conventional financial market. Customizable in that they can settle trades more quickly and 24/7 trading is a possibility, tokenized stocks present an advantage over conventional equities.
Associations with Nasdaq (especially Kraken) underscore the push toward the tokenization of the financial industry, turning tokenized stocks into the future financial ecosystem. Even though obstacles still exist, the authorization of the SEC will allow the further evolution of tokenized assets, which may change the future of trading and investing in classical assets.