On September 8, 2025, Nasdaq submitted a landmark proposal to the U.S. Securities and Exchange Commission (SEC), seeking to modify exchange rules to allow trading of tokenized securities on its market. This means that U.S. stocks listed on Nasdaq, such as Apple and Amazon, could potentially be listed and traded in blockchain token form on Nasdaq in the future. If approved, this would be the first case of a major U.S. securities exchange allowing tokenized stock trading, marking the first large-scale introduction of blockchain technology into Wall Street's core markets. This article systematically reviews the key points of Nasdaq's proposal, the underlying motivations, and the potential market transformation this move could bring, its impact on the "U.S. stocks on-chain" sector and related segments, and prospects for the potential development path of this innovative initiative.

**Proposal Highlights: Detailed Analysis of Nasdaq Trading Rule Modifications**

Nasdaq's 19b-4 rule modification filing submitted to the SEC centers on allowing member broker-dealers and investors to choose to trade and settle Nasdaq-listed equity securities and exchange-traded products (ETPs) in tokenized form. The proposal includes several specific rule revisions:

**1. Expanding the Definition of "Securities" to Include Tokenized Forms**

The proposal first modifies the exchange's definition of "securities," emphasizing that "tokenized securities remain securities," rejecting isolated trading models disconnected from the main market and expanding the definition to include two forms:

• Traditional form: Digital record-keeping representation of asset ownership and rights that does not use distributed ledger or blockchain technology. This refers to the current electronic record-keeping form used by U.S. stocks, essentially still corresponding to electronic registration of paper securities.

• Tokenized form: Digital representation of asset ownership and rights that utilizes blockchain (distributed ledger) technology for recording and transfer. Simply put, this means issuing equity rights corresponding to stocks on the blockchain, represented in token form.

Nasdaq explicitly stipulates that only when a tokenized security has completely fungible characteristics with its corresponding traditional security is it considered equivalent and can trade together with traditional forms in the same order book. This means the token must satisfy: fungibility with traditional stocks, shared CUSIP codes (securities uniform identification codes), and grant holders the same substantial rights and privileges as traditional stocks—including equity income claims on the company, dividend rights, voting rights, and residual asset distribution rights during company liquidation. If the tokenized form fails to grant equivalent rights to the original stock (no voting rights, no shareholder equity, etc.) or lacks the same CUSIP as the original stock, the exchange will not consider it equivalent to traditional securities but will treat it as a different product, such as derivatives or American Depositary Receipts (ADRs).

Due to these high standards, most current so-called "tokenized stocks" on the market, such as Robinhood's Stock Tokens and Xstocks, do not meet the above conditions and are at best shadow tokens that mirror stock prices without representing genuine equity ownership. They typically do not grant voting rights, with dividends often manifested through reinvestment or cash equivalent methods. Legal relationships often point to SPVs or issuing vehicles rather than the listed companies themselves, with most products primarily offering cash redemption, while direct "conversion back to original stocks" faces custody and compliance restrictions.

**2. Unified Matching, Segregated Settlement: Trading and Clearing Mechanisms**

Nasdaq plans to fully integrate tokenized securities with traditional securities at the trading level. The proposal stipulates that as long as a stock's tokenized version meets the above fungibility requirements, it will share the same order book with traditional stocks and follow identical order matching and priority rules for trade execution. In other words, from the exchange's matching engine perspective, tokenized and non-tokenized buy and sell orders are treated equally without distinction. Indeed, Nasdaq emphasizes: "At the trading stage, there is no difference between the two; the trade execution process is essentially identical."

The difference manifests at the settlement level. Currently, U.S. stock trades typically complete clearing and settlement through the Depository Trust Company (DTC) after trade execution. With the introduction of tokenized forms, Nasdaq will provide trading participants with a new option to settle in token form during settlement, with the specific process being:

Broker-dealers can choose to specify when inputting orders to the exchange that the order wishes to be cleared and settled in token form. If the order is executed and marked for token settlement, Nasdaq will transmit the clearing instruction for that trade to DTC, which will execute the security's delivery and transfer through blockchain in the background.

DTC will complete the process of registering stock ownership in on-chain token form based on its business rules and systems (the blockchain settlement platform it is developing). The entire process is transparent and seamless to front-end investors, with trading still matched on Nasdaq, only the clearing and settlement changing from traditional electronic bookkeeping to blockchain registration, with stocks ultimately held in token form at on-chain addresses.

Notably, Nasdaq's move is not to create a new market from scratch but to rely on existing market infrastructure, introducing blockchain as the underlying recording technology without changing front-end trading mechanisms. Therefore, traditional stocks and tokenized stocks have unified pricing during the trading stage, sharing market depth and liquidity, with identical information transparency and risk control monitoring. As Nasdaq states in the document, this approach aims to prevent different versions of tokenized stocks from operating independently across multiple blockchains with fragmented liquidity, ensuring that core mechanisms of the national market system such as price discovery and best execution remain unaffected. This addresses previous "tokenized stock" pain points of multiple chains (ETH/SOL, etc.) + multiple markets (compliant on-exchange vs. crypto exchanges/DEX) + regional compliance restrictions, leading to insufficient liquidity due to dispersed market-making capital and order books.

**3. Trading Hours Restrictions: No 24/7 Round-the-Clock Trading for Now**

Tokenized stocks have long faced issues of thin depth and high impact costs during U.S. market closure periods, and this trading time misalignment has also contributed to insufficient liquidity and price decoupling. Therefore, many investors are concerned whether tokenized stocks can break through existing U.S. stock trading time restrictions to achieve "24/7" round-the-clock trading. Nasdaq's proposal provides a cautious answer: at the current stage, tokenized securities can only trade during existing trading hours and will not extend or break through trading times. Tokenized stocks cannot trade outside normal and extended hours, still following U.S. stock conventions, only tradeable during regular hours (9:30-16:00 ET) and pre-market/after-hours sessions Monday through Friday, without support for weekend or late-night trading.

**4. Implementation Path for On-Chain Settlement**

Behind Nasdaq's tokenized stock trading lies the core clearing institution of traditional financial markets—the Depository Trust & Clearing Corporation (DTC). Notably, DTC has been exploring DLT clearing in recent years, with its "Project Ion" being a blockchain-based stock settlement platform aimed at achieving T+0 or even real-time settlement. According to public information, Project Ion went live in a parallel testing environment in 2022, processing over 100,000 stock trade settlement instructions daily. DTC collaborated with enterprise blockchain technology provider R3 to develop the platform, using R3's Corda distributed ledger software to build a private permissioned chain as the underlying architecture—a non-public consortium chain network.

This suggests that Nasdaq's tokenized trading will more likely operate on DTC's permissioned chain platform rather than public chains like Ethereum that the community has been discussing. This allows DTC to maintain traditional systems as authoritative records while running in parallel with new DLT systems to ensure security redundancy. Therefore, under Nasdaq's scheme, on-chain settlement may actually occur in a controlled "consortium chain" environment, with nodes maintained by financial infrastructure operators like DTC. This ensures transaction privacy, network reliability, and regulatory controllability, meeting Wall Street's high standards for trading settlement systems.

Consortium chains allow controlled participant access, with more controllable data privacy and transaction speeds that meet regulatory requirements. Therefore, it can be anticipated that Nasdaq tokenized stock records will not appear on public blockchain explorers but will be stored in distributed ledgers jointly maintained by Nasdaq, DTC, and related custody institutions. While Nasdaq has not specified in public documents how smart contracts will be deployed, it's clear that Nasdaq does not intend to introduce a completely open token trading environment but rather let blockchain serve as "behind-the-scenes technology" to improve efficiency, with front-end trading behavior still occurring within controlled systems. Only the bookkeeping method changes to blockchain recording, meaning investors will hold regulatory agency-recognized on-chain records rather than completely system-independent, freely circulating crypto tokens.

**Why is Nasdaq Applying for Tokenized Securities?**

Blockchain has enormous potential for improving financial market infrastructure efficiency. Current U.S. stock trading settlement remains T+1 (T+2 in some markets) delayed settlement, while blockchain technology can achieve near real-time (T+0 or even within seconds) settlement, reducing capital and securities idle time and lowering counterparty risk. Additionally, blockchain's transparent and immutable distributed ledger can provide comprehensive audit trails, reducing reconciliation and manual operation errors. Nasdaq hopes to introduce tokenized settlement to accelerate post-trade processes while reducing clearing and custody costs. This can be seen as an attempt to revolutionize securities settlement mechanisms from the ground up. As Nasdaq states in the document: "Today's securities like stocks have evolved from their original paper form to electronic records, and tokenization is just another method of digitally representing assets." By embracing blockchain, the exchange demonstrates its determination to drive fintech innovation to avoid falling behind in the new technology wave.

The tokenized asset market is expected to experience explosive growth, with global tokenized asset market cap projected to surge from approximately $2.1 trillion in 2024 to about $41.9 trillion in 2032, representing a compound annual growth rate of 45.8%.

Therefore, investors and issuers show strong interest in securities tokenization, representing a huge emerging market opportunity. Many countries' regulators and market participants are actively exploring securities on-chain solutions, and the U.S. cannot fall behind. As a market organizer, Nasdaq hopes to follow this trend, providing clients with new trading options and thereby attracting more capital to U.S. markets. Through early positioning, Nasdaq can consolidate its competitiveness in the digital asset era, especially against the backdrop of the White House actively promoting crypto asset innovation and creating a digital asset-friendly regulatory environment, ensuring tokenized securities develop within compliant frameworks while preventing market fragmentation. As mentioned earlier, many tokenized stocks currently trade on offshore unregulated platforms lacking investor protection, with different platforms operating independently, leading to liquidity fragmentation and market opacity. Nasdaq's proposal aims to bring these innovations into mainstream regulatory systems, avoiding investors falling into unregulated risks while pursuing novel concepts.

While exchanges won't aggressively open various flashy features in the short term, long-term stock tokenization opens imagination space for financial innovation. For example, stocks can serve as on-chain collateral for decentralized finance (DeFi), equity tokens can be programmatically integrated into smart contracts for automated dividends and voting, and even construct entirely new derivative and index products. These scenarios, difficult to achieve under traditional architectures, may gradually become possible after tokenization. However, it's important to note that Nasdaq's tokenized securities trading venue remains on Nasdaq, meaning matching occurs in compliant centralized environments, not allowing anonymous on-chain trading by anyone.

**Conclusion: Long-term Opportunities and Industry Outlook**

Nasdaq's push for tokenized securities trading is undoubtedly a major innovation in securities trading underlying technology, marking a crucial step for traditional financial markets toward the blockchain era. From regulatory approval to technical preparation, this transformation cannot happen overnight. According to Nasdaq's application filing, the readiness time for related blockchain settlement infrastructure may not come until the end of Q3 2026. Nasdaq expects that assuming the proposal receives SEC approval and DTC's distributed ledger settlement system comes online by then, U.S. investors may see the first batch of securities trades settled in token form by the end of Q3 2026.

For investors, it's important to recognize this as a long-term theme. The GENIUS Act opened a new era of stablecoin compliance, and Nasdaq tokenized securities could become the next game-changing milestone event. Over the coming years, policy progress and technical milestones related to this theme will continuously become market focal points, creating periodic investment opportunities in sectors like oracles and RWA. As Nasdaq management states, innovation should occur within the national market system to protect investors rather than remain in unregulated offshore wilderness. As Nasdaq tokenized stocks gradually materialize, they will unlock greater imagination space for institutional capital participation in on-chain stocks.

For example, large institutions can obtain genuine stock tokens through official channels and then confidently deploy them in DeFi for yields—high-level capital that current shadow token platforms struggle to attract. For general users, when sovereign-level exchanges provide compliant stock tokens, holding "non-shareholder rights" shadow versions becomes less necessary.

While prospects are bright, potential limitations must be acknowledged. First, in the initial stage, direct benefits for ordinary investors may be limited. Currently, U.S. retail investors trading stocks through brokers is already quite convenient, and Nasdaq tokenization won't immediately significantly reduce their trading costs or barriers. Benefits like 24/7 trading may not be desired by non-professional investors who may not want stocks trading and fluctuating seven days a week without rest periods. Smart contracts inevitably carry risks of vulnerabilities or hacker attacks—who bears responsibility if tokenized stock contracts have problems remains unknown. Additionally, some offshore unregulated tokenized stock trading has experienced significant price deviations, exposing liquidity shortage and potential manipulation issues. Under Nasdaq's scheme, such deviation phenomena are expected to decrease since tokens have real stock backing and traditional market makers participate in pricing.

Nasdaq tokenized stock trading will become a major milestone in blockchain technology commercialization. It means blockchain is no longer limited to cryptocurrency circles but truly enters mainstream finance's core scenarios. From an industry status perspective, this is an authoritative endorsement of blockchain and Web3 ecosystems, encouraging more enterprises and developers to invest in this field. From a financial history angle, this event may be viewed as the starting point of traditional securities market digital transformation, similar to exchanges transitioning from paper to electronic trading decades ago. For the Web3 community, this is an opportunity to put ideals into practice: concepts like decentralization and tokenization can only release maximum value when combined with the real economy. While this may not be the most utopian outcome for pure decentralization idealists, it greatly advances large-scale blockchain application progress.