The Securities and Exchange Commission has approved a Nasdaq rule change that allows it to trade tokenized securities, a significant milestone for a mainstream stock exchange. The approval is closely linked to the DTC’s receipt of an SEC no action letter in December 2025 allowing the DTC to tokenize stocks at a post trade level. Both the Nasdaq and DTC green lights cover Russell 1000 stocks and index ETFs, with the DTC pilot also extending to Treasuries.
Conventional and tokenized stocks will carry the same rights and be traded in exactly the same manner on the same order books. The only difference is for a purchase, the buyer would need to set a tokenization flag to communicate that it wants delivery in token form, specifying the blockchain and wallet address. The DTC will handle the tokenization and settlement.
While the approval represents major progress, at this stage the entire trade clears and settles conventionally on a T+1 basis through existing NSCC/DTC rails. The tokenization happens as a post trade step once settlement is complete. In other words, when someone buys a tokenized stock, they pay for it and receive it next day in the usual manner, and then the DTC converts the entitlement into token form. Likewise, selling a tokenized stock requires converting back before settlement which also happens T+1. Given instant settlement is one of the critical benefits of tokenization, there is still work to come and this is something the DTCC plans to explore with digital cash settlement in 2027. That said, once the tokenization step has concluded, the tokenized security can be instantly transferred for use as margin collateral or other purposes. It is simply the Nasdaq transaction leg that is T+1.
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