Wall Street is ‘ring-fencing’ the blockchain tech as Nasdaq’s tokenization plan wins a major regulatory battle

The SEC’s fresh approval of Nasdaq’s tokenized securities framework marks a key turning point for how stocks could trade in the future: it brings blockchain into the core of U.S. equity markets, but on Wall Street’s terms.

The regulatory green light allows Nasdaq to test a system where certain stocks and ETFs can be issued and settled as blockchain-based tokens while trading alongside traditional shares. In practice, investors could hold tokenized versions of securities in digital wallets, with clearing and settlement handled by the Depository Trust & Clearing Corporation (DTCC).

However, the effort isn’t a sweeping overhaul of market operations; rather, it focuses on post-trade plumbing.

DTCC executive Brian Steele said the firm aims to build “safe, secure tokenization services to advance a more resilient, inclusive, cost-effective and efficient financial system,” while working with exchanges and market participants to scale adoption.

Read more: Here is why Nasdaq and owner of NYSE are putting the $126 trillion equity market on blockchain

‘Biggest beneficiaries’

One of the main reasons Wall Street giants are moving to tokenizing stocks is that they can offer traders around-the-clock trading.

Traditional equity markets operate within fixed trading hours and rely on multi-day settlement cycles. Creating tokens of stocks on blockchain rails brings the possibility of near-instant settlement and, eventually, around-the-clock trading.

Val Gui, general manager at Kraken’s tokenized stock platform xStocks, called the approval “a clear signal the $126 trillion equity market will be shifting onto blockchain rails,” pointing to a future where stock ownership becomes “24/7 and global.”

“This builds on the SEC’s work with the DTC, and it’s an encouraging one,” said Ian De Bode, president of tokenization firm Ondo. “Progress toward 24/7 markets, even in permissioned form, is positive.”

“The biggest beneficiaries will be global investors… who have long lacked seamless, around-the-clock access to U.S. equities,” he added.

For that connection, Nasdaq said it is tapping crypto exchange Kraken to distribute stock tokens globally.

Wall Street keeps control

Still, Nasdaq’s model does not replace the old financial system. It only extends it to onchain securities.

Tokenized shares will still trade through brokers and settle via DTCC, with blockchain used mainly as an alternative record of ownership.

“Nasdaq is effectively ring-fencing the benefits of blockchain within the existing TradFi [traditional finance] stack,” said Maylea Ma, deputy general counsel at 1inch, a decentralized exchange (DEX) aggregator.

Investors may see faster settlement or more flexible ownership features, she said, but only inside a permissioned system that still relies on intermediaries.

“If tokenized equities cannot connect to broader onchain liquidity and non-custodial execution, the efficiency gains will be incremental rather than transformational,” Ma said.

‘Still a step behind’

While the move is a step towards the future of trading, U.S. is still lagging behind other jurisdictions.

Jesse Knutson, head of operations at Bitfinex Securities, who has worked on tokenized issuances in frontier markets like Kazakhstan and El Salvador, said the approval reflects regulatory progress but also highlights how far U.S. efforts still have to go.

“The flexibility of tokenization is what markets really want” offering 24/7 trading, fractionalization, real-time settlement and the ability to self-custody, he said.

In places like Kazakhstan’s Astana International Financial Centre (AIFC) and El Salvador, regulators have already allowed tokenized securities to be issued and traded with fewer legacy constraints, including more direct investor access and blockchain-native settlement. Other hubs such as Switzerland and the UAE also moved faster to establish frameworks for digital asset issuance and trading, giving firms room to experiment.

“It’s an encouraging move… but it’s still a step behind more progressive jurisdictions,” Knutson said.

To be fair, U.S. regulators oversee the world’s largest and most dominant equity market — worth roughly $62 trillion — which leaves less incentive and flexibility to overhaul the existing systems in favor of newer blockchain-based models. Any changes must fit within a deeply entrenched market structure built around investor protection, intermediaries and centralized clearing.

But for now, the SEC’s decision suggests a clear direction: Tokenization is coming to public markets, and it will be shaped, at least initially, by the same institutions and rules that define them today.