Nasdaq Files With SEC to Launch Tokenized Securities Trading
Nasdaq is making strides towards modernizing financial markets by embracing blockchain technology. The company recently announced that it has filed with the U.S. SEC to allow trading of tokenized securities on the Nasdaq stock market. This move aims to leverage blockchain technology to promote safe growth for investors, companies, and markets.
In seeking rule changes from the SEC, Nasdaq is proposing to enable member firms and investors to trade tokenized versions of stocks and ETPs on its platform. The company is specifically requesting updates to certain rules, such as the definition of a security, to facilitate the tokenization of stocks and their listing on Nasdaq. Nasdaq emphasizes that tokenized securities must offer the same rights and benefits as traditional shares to trade alongside them on the same order book with equal priority.
To ensure smooth processing for all market participants, Nasdaq is advocating for clear labeling of tokenized assets. Under this plan, a security could be traded in either traditional form, as a digital record without blockchain, or in tokenized form, which uses blockchain to represent ownership and rights. Nasdaq believes that markets can benefit from tokenization while maintaining the protections of the national market system.
Nasdaq also emphasizes that tokenized securities should only be traded on regulated markets, such as national securities exchanges, alternative trading systems, and FINRA-regulated broker-dealers. The company references SEC Commissioner Hester Peirce’s remarks that tokenized securities are still subject to federal securities laws and must be traded accordingly.
In light of potential risks, Nasdaq warns investors about platforms in Europe that offer “tokenized U.S. equities” but only provide digital rights tied to shares held by the platform. This means investors may not receive full ownership benefits like voting rights or asset claims.
Looking ahead, Nasdaq’s SEC filing will undergo a public comment period, during which the company will collaborate with clients and stakeholders to gather feedback and ideas for advancing the industry. Nasdaq’s CEO, Atkins, views tokenization as an innovation and believes that the SEC should support and foster innovation in the markets. He has launched Project Crypto to modernize rules and enable America’s financial markets to operate on-chain.
