The U.S. Securities and Exchange Commission has approved Nasdaq‘s proposal for a pilot program to trade tokenized stocks and securities. Eligible participants can trade tokenized versions of top U.S. equities, which will operate on the same order book and at the same price as traditional shares. This regulatory move follows increasing institutional interest in blockchain technology for financial markets.
The U.S. Securities and Exchange Commission on Wednesday approved Nasdaq‘s pilot proposal to support the trading of tokenized versions of stocks and other securities. Nasdaq first filed this proposal in September to allow trades on high-volume stocks in either a traditional or tokenized form.
The tokenized stocks would trade alongside their traditional counterparts on the same order book and at the same price. They would also carry the same ticker, identifying number, and rights.
According to the SEC’s approval filing, only “eligible participants” can take part in the tokenization pilot. The eligible securities are limited to those in the Russell 1000 Index and certain major exchange-traded funds.
The SEC noted the proposal received feedback with concerns around market surveillance and diverging prices. It stated these were later allayed by an amendment laying out more details.
This approval follows Nasdaq‘s recent partnership with crypto exchange Kraken to allow clients to move securities to tokenized versions. New York Stock Exchange owner the Intercontinental Exchange has also invested in crypto exchange OKX to launch tokenized stocks.
SEC Chair Paul Atkins said on Tuesday the agency would soon seek public comment on crypto-related exemptions. This includes a “fundraising exemption” for some securities involving crypto.
