Wall Street’s cautious courtship with blockchain just moved into official relationship status. On Wednesday, Nasdaq won regulatory approval to let certain listed stocks and exchange-traded funds trade and settle as blockchain-based tokens, right alongside their traditional versions on the same exchange.
In plain English, that means tokenized versions of large-cap U.S. stocks and major index ETFs will be able to sit in the same Nasdaq order book as the regular shares, with the Depository Trust Company handling the minting and custody of those tokens. Exchanges and clearinghouses say the move could eventually set the stage for faster settlement, near 24/7 access and new tools for issuers to manage shareholder rights, although regulators are keeping this first phase tightly controlled and limited.
What the SEC approved
The Securities and Exchange Commission signed off on a Nasdaq rule change that tweaks the exchange’s equity rules so member firms can flag orders for tokenized settlement and trade tokenized securities on the same order book as traditional shares. The SEC’s order spells out several non-negotiables: tokenized shares must be fungible with traditional shares, carry the same CUSIP and trading symbol, and give holders equivalent rights and execution priority, according to the SEC.
DTCC pilot sets the guardrails
The SEC’s move rests on groundwork laid in a December staff no-action letter that cleared the Depository Trust Company to run a three-year tokenization pilot for a carefully defined set of assets. DTCC says those DTC-eligible securities will include stocks in the Russell 1000 and ETFs that track major indexes such as the S&P 500 and Nasdaq-100, with a controlled roll-out expected in the second half of 2026.
How tokenized trading will actually work
Under Nasdaq’s approved rules, a market participant will be able to select a tokenization flag when entering an order. If the trade executes, Nasdaq will pass that instruction to DTC, which will mint and deliver a token to a DTC-registered wallet and reconcile a control account in the background.
According to Nasdaq, tokenized and traditional shares will use the same order types, market data feeds, surveillance tools and T+1 settlement cycle. Tokenized orders will not get any special execution priority over plain-vanilla trades, which is regulators’ way of saying this is an infrastructure upgrade, not a new VIP lane.
What’s next for markets
Nasdaq has committed to give its members at least 30 calendar days’ notice before it starts trading any DTC-eligible tokenized securities. The actual timing for live token-settled trades will depend on DTC’s onboarding process and how quickly member firms get their systems ready.
Market participants expect the earliest tokenized settlements to show up only after DTC’s pilot and participant onboarding are complete, potentially in the third quarter of 2026, according to Reuters.
Legal and risk notes
Regulators and SEC staff are stressing that tokenized shares are still securities under U.S. law, which means all the usual disclosure, reporting and investor-protection rules apply. SEC Commissioner Hester Peirce praised the staff’s narrowly scoped, incremental approach in a December statement, signaling official interest but not a regulatory free-for-all.
Legal advisers are quick to note that some big questions remain unresolved, including how firms will handle custody, AML and KYC controls, cross-chain interoperability and operational resilience. Those challenges have been flagged in regulatory commentary and in private-sector analysis from firms such as Greenberg Traurig, a reminder that while tokenization is edging into the mainstream, the plumbing still has a lot of stress-testing to go.
