Nasdaq Proposes Rule Change to Permit Trading of Tokenized Securities
Commentary by Andrew Lom
The Nasdaq Stock Market LLC proposed amending its equity rules to allow members to trade securities in tokenized form on the exchange.
The proposal would amend Equity 1 ("Definitions") and Equity 4 ("Equity Trading Rules")—specifically Rules 4756 ("Entry and Display of Quotes and Orders"), 4757 ("Book Processing"), and 4758 ("Order Routing").
Under the proposed amendments, tokenized securities that share the same CUSIP and material rights as traditional shares would be recognized and allowed to trade on the same order book as their traditional counterparts. Participants could flag orders for tokenized settlement at entry, with Nasdaq transmitting those instructions to The Depository Trust Company for post-trade clearance. Routed executions would also carry tokenization instructions to DTC, and tokenized orders would execute with the same priority as traditional orders.
Nasdaq filed the proposal with the SEC on September 8, 2025.
Commentary
If the tokenized shares really do have the same rights as their traditional counterparts, it stands to reason that their regulatory treatment should be fundamentally similar, and not altered by the mere fact of choosing blockchain as the technological solution for share ownership and record keeping. If anything, as noted in this Citadel letter to the SEC's Crypto Task Force, investor protection and market efficiency are increased by such similar treatment. The conclusion may be different for other tokenized instruments that don't have such similar rights as their underlying or referenced assets.