SEC approves Nasdaq tokenized stock trading rule, allowing blockchain-based shares to trade with normal stocks and opening path for regulated digital markets.
The United States Securities and Exchange Commission has approved a new Nasdaq rule that allows tokenized stocks to trade on its exchange. This decision is seen as a major step towards bringing blockchain technology to the traditional financial markets. The change means digital versions of stocks could be traded in a regulated way whilst still abiding by normal market rules.
Tokenized Stocks Move Closer to Mainstream Markets
Tokenized stocks are digital representations of real stocks that are stored on a blockchain. These tokens have the same ownership as normal stocks. With the new rule, tokenized shares and traditional shares can trade in the same order book. They will have same price, same ticker symbol and same priority during the trading.
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The first phase of the plan will be big and popular stocks. These include companies that are listed in the Russell 1000 Index and exchange traded funds that are linked to the S&P 500 and Nasdaq-100. Starting with stocks at a high volume will help the system work smoothly, officials said.
Investors who opt for tokenized shares will still receive full shareholder rights. They can receive dividends, vote on company decisions, and receive liquidation payments just like regular shareholders. Settlement will still be handled by the Depository Trust Company which already handles most stock trades in the United States.
To get such shares in the form of tokens, traders should select a special setting called tokenization flag when placing orders. They also need a compatible blockchain wallet. If the wallet does not work, the trade will be settled in the normal way that no order will fail.
Nasdaq Works With Crypto Firms for Global Access
Nasdaq said it is working with crypto exchange Kraken to help distribute the distribution of tokenized stocks to investors worldwide. This partnership will enable users outside the United States to have easier access to US equities. Many investors from around the globe are unable to trade US stocks at all times due to the fact that stock markets only open on weekdays.
With tokenized trading, it would be possible for markets to trade 24/7 in the future. This idea has been turned into a popular in the light of the fact that crypto markets are already trading twenty-four hours a day. Ian De Bode, president of tokenization company Ondo, said the approval is a positive sign for digital markets. He explained that advancements toward and toward round-the-clock trading could help investors everywhere.
Nasdaq is also working with Boerse Stuttgart in Europe, to connect tokenized settlement systems. These partnerships are aimed at creating the bridge between the traditional financial world and the blockchain-based markets. The aim is to make the trading faster and maintain robust regulation and investor protection.
Before trading starts, Nasdaq must provide at least 30 days notice to market participants. This will give brokers, exchanges and investors some time to prepare for the new system. Officials said the launch will take place only after the testing is done.
Traditional Finance Still Controls the System
Even though blockchain is being added, the new system will still be based on the traditional market rules. Tokenized shares will be traded via brokers and will settle using existing financial infrastructure. Blockchain will primarily be used as a digital record of ownership rather than replacing the current system.
Some experts say such an approach keeps the market safe but limits how much change can happen. Maylea Ma of the trading platform 1inch said the system keeps the majority control within the traditional finance structure. She explained that those investors might gain faster settlement and more-flexible ownership, but only within a controlled environment.
Supporters believe that change is still important. They say tokenized securities could make them more open and accessible for markets. With millions of blockchain trades already taking place, many companies believe that tokenization will become a normal part of finance.
The SEC approval demonstrates that regulators are willing to take new technology and maintain strong rules. If the plan works, tokenized stocks could become a regular feature of US capital markets and may result in more digital trading in the future.