The U.S. Securities and Exchange Commission approved Nasdaq's rule change to enable the trading of tokenized securities, integrating blockchain technology into the traditional stock market framework.

The decision follows Nasdaq's 2025 proposal and amendments, allowing tokenized securities to trade on Nasdaq under the DTC Pilot as the program progresses.

SEC approval came after a seven-month review to ensure compliance with federal securities laws and investor protections, with amended rules enabling trading of tokenized securities.

Market participants can choose a tokenization preference when placing orders, indicating whether settlement should occur in token form or traditional form, and may include details like the blockchain and digital wallet address.

The SEC asserts that investor protections remain intact, with surveillance, data reporting, and settlement timelines preserved in the tokenized framework.

This development signals the growing maturity of tokenized securities in mainstream markets and that the initial assets eligible for trading are part of a pilot.

Tokenized securities are blockchain-based representations of traditional instruments, with ownership recorded as digital tokens on a distributed ledger, potentially enabling around-the-clock trading and faster settlement.

Tokenization is expanding traditional assets like stocks, bonds, and funds, enabling near-instant, 24/7 trading with tokens pegged to real-world assets.

If tokenization requirements are not met, trades revert to traditional settlement, and Nasdaq maintains its core trading infrastructure with identical order-book dynamics and market data handling.

Tokenized securities must mirror traditional shares in rights to avoid divergence in value or protections, with the DTC pilot providing a controlled framework to manage blockchain-based trading within existing market risk controls.

The move is framed as a regulatory nod to blockchain-based assets that could bolster institutional interest in digital currencies, without directly affecting Bitcoin’s price or network.

Nasdaq's tokenization plan is part of a pilot with the Depository Trust Company to clear and settle tokenized trades, allowing eligible Nasdaq participants to settle as blockchain-based tokens.