The SEC has approved Nasdaq's rule change proposal. As a result, the second-largest US exchange can now trade stocks and ETFs in tokenized form and settle them through the Depository Trust Company (DTC). This approval (Document No. 34-105047) initially covers a pilot program.
The program is limited to Russell 1000 Index stocks and ETFs tracking the S&P 500 and the Nasdaq 100. Nasdaq filed the original application in September 2025. In January 2026, the exchange submitted a revised version (Amendment No. 2). At the same time, the SEC published a Staff Statement granting tokenized stocks the same legal status as traditional securities. For global distribution, Nasdaq is partnering with Payward, the parent company of crypto exchange Kraken. The partnership targets a launch in the first half of 2027.
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How the pilot program works
Tokenized stocks trade in the same order book as their traditional counterparts. Tickers, CUSIP numbers, prices, and execution priorities remain identical. Both formats are fully fungible, as investors can switch between tokenized and traditional settlement at any time. Voting rights and dividend entitlements are preserved. This prevents a fragmented parallel market from emerging.
When placing orders, market participants actively choose whether to settle in tokenized form. If a trade does not meet the requirements, settlement automatically reverts to the traditional route. Clearing continues on a T+1 basis through the DTC. Nasdaq deliberately opted against building its own blockchain infrastructure and instead relies on the existing clearing architecture.
There is no separate trading venue and no dedicated liquidity pool. Tokenized and traditional stocks merge into a single market. This approach differs fundamentally from previous tokenization attempts, which mostly operated on standalone platforms and failed due to insufficient liquidity.
Traditional exchanges and crypto firms converge
Nasdaq is not alone in this push. Intercontinental Exchange (ICE), owner of the New York Stock Exchange, has also positioned itself. ICE invested in crypto exchange OKX at a valuation of $25 billion. Plans include tokenized stocks and crypto futures products for OKX's 120 million users.
This convergence follows a clear logic. Traditional exchanges want access to crypto trading volume and a younger user base. Meanwhile, crypto exchanges like Kraken and OKX seek regulatory credibility and access to established financial markets. Both sides benefit. Yet they remain competitors.
Nasdaq's partnership with Payward illustrates this dynamic. The crypto firm provides the technical infrastructure for global distribution of tokenized stocks through its xStocks platform. In return, Nasdaq contributes the regulatory approval and the order book. Arjun Sethi, co-CEO of Payward, highlighted expanded access for international clients and greater efficiency in collateral management.
Market potential: from $1 billion to $19 trillion
The global equity market totals around $126 trillion. Tokenized stocks currently account for roughly $1 billion. According to a BCG/Ripple forecast, tokenized assets across all asset classes could grow to $18.9 trillion by 2033. That corresponds to annual growth of 53 percent.
Nasdaq's approach targets exactly this opportunity. Rather than creating an isolated on-chain marketplace, the exchange integrates tokenized securities directly into its existing order book. This addresses the core problem of previous tokenization attempts: fragmented liquidity between on-chain and off-chain markets. Additionally, the current US administration's more regulation-friendly stance has supported such initiatives. The SEC's Staff Statement from January 2026 on the legal equivalence of tokenized stocks created a critical regulatory foundation.
Nasdaq and Payward plan to launch the xStocks platform in the first half of 2027. Through the platform, tokenized stocks will then become available internationally. Tal Cohen, president of Nasdaq, described the initiative as a step toward an "always-on financial ecosystem." ICE is also working on its own tokenized products through the partnership with OKX, though without naming a specific launch date so far.
