US SEC Advances Proceedings to Enable Nasdaq Launch Tokenized Securities Trading

The US Securities and Exchange Commission (SEC) has started proceedings on the proposal by Nasdaq to launch trading of tokenized securities, including stocks, on the exchange. It follows the SEC’s no-action letter to the DTCC over its real-world asset (RWA) tokenization services.

Nasdaq Tokenized Securities Trading Proposal Reaches Next Stage

The US SEC seeks additional comments to determine whether to approve or deny a proposed rule change by Nasdaq to list and trade tokenized securities, according to the commission’s order.

“Institution of proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change,” the SEC said.

The commission has received comments in favor of the proposed rule change by Nasdaq, including by the Securities Industry and Financial Markets Association. Cboe Global Markets, Better Markets, and Ondo Finance opposed tokenized securities trading on Nasdaq.

As CoinGape reported earlier, Nasdaq plans to offer trading of securities on its platform in tokenized form. Notably, Galaxy Digital became the first Nasdaq company to tokenize its common stock on Solana.

The tokenization of securities will improve transparency, accelerate settlement times, and enhance market efficiency for both issuers and investors. However, the commission seeks comments and poses targeted questions concerning investor protection, market integrity, and technological safeguards.

The agency emphasizes that any new trading mechanisms for tokenized securities must maintain existing regulatory standards and effectively mitigate risks including fraud and market manipulation.

SEC Greenlights DTCC for RWA Tokenization

The SEC has issued a no-action letter to Depository Trust Company (DTC) of Depository Trust & Clearing Corporation (DTCC) to tokenize certain custody assets. DTCC claims it aims to bridge TradFi and DeFi, advancing a more resilient, inclusive and efficient global financial system.

Notably, the securities transactions on Nasdaq will clear and settle in tokenized form at the DTC after approval by the SEC. This makes the green light to DTC by the commission a major step towards potential approval.

Recently, the U.S. Commodity Futures Trading Commission also agreed to the use of tokenized assets as collateral in the country’s derivatives markets. It announced a new pilot program that will allow certain digital assets as collateral in U.S. derivatives markets.