Nasdaq’s Tokenization Proposal: A Careful Step Toward Modernizing Market Infrastructure

Written By K. Braeden Anderson

Nasdaq’s tokenization rule filing with the U.S. Securities and Exchange Commission is one of the most meaningful attempts yet to introduce blockchain-based representations of securities into the existing U.S. market structure.

You can’t understand Nasdaq’s tokenization proposal by asking what it adds. You understand it by seeing what it refuses to change.

While many assume Nasdaq is reinventing how securities trade. The filing goes out of its way to do the opposite.

It is not a reinvention of how securities trade. It is not a move toward decentralized markets.

For a space that has seen years of speculation and ambition, this proposal is defined by restraint.

What Nasdaq Filed

On September 8, 2025, Nasdaq submitted a proposed rule change, SR-NASDAQ-2025-072, that would allow market participants to elect, at order entry, whether a trade in a Nasdaq-listed equity or ETP should settle in traditional book-entry form or in a “tokenized form.”

Under the proposal:

  • Both representations would share the same CUSIP.

  • They would confer the same economic and governance rights.

  • They would trade under the same rules, order types, routing logic, and surveillance that govern all Nasdaq trades today.

The only difference lies in how DTC records post-trade settlement.

Nasdaq is not proposing a new class of securities, a new exchange, or a new market structure. It is proposing a second, technologically distinct method for representing ownership.

How Tokenized Settlement Would Work

The filing outlines a basic workflow but emphasizes that DTC is still developing its tokenization service. According to the public record:

  • A participant may flag an order for tokenized settlement.

  • Nasdaq will process the trade exactly as it would any other order.

  • Nasdaq will communicate the settlement preference to DTC.

  • DTC would then convert book-entry shares into a blockchain-based token and deliver that token into a DTC-registered digital wallet for the participant.

  • DTC and Nasdaq would maintain reconciliation between the tokenized representation and the book-entry control account.

Nasdaq does not identify the blockchain, the ledger design, or the specific custody model.

DTC’s June 2025 memorandum to the SEC describes the tokenization service conceptually, not technically, and notes that the architecture remains under development.

Crucially, nothing in the filing suggests that tokenized shares would circulate outside DTC’s ecosystem or be transferrable through permissionless chains. The tokenization layer is closed, supervised, and anchored to existing infrastructure.

Settlement timing also does not change. Trades would continue to settle on T+1.

What the Proposal Does Not Do

The SEC filing is equally notable for what it avoids.

  • It does not shorten settlement cycles.

  • It does not eliminate intermediaries.

  • It does not create interoperability across blockchains.

  • It does not introduce smart-contract-based corporate actions.

  • It does not create new digital instruments or tokenized “versions” that live independently of DTC.

Why Nasdaq Is Pursuing This

Nasdaq frames the proposal as a response to growing interest in blockchain-based recordkeeping from market participants, but with an insistence that any innovation must preserve the integrity of the existing system.

The exchange notes that:

  • U.S. markets already rely on digital representations of securities.

  • Tokenization is simply a different method of maintaining those records.

  • The federal securities laws do not prohibit multiple digital representations of the same security, so long as rights and obligations are identical.

Nasdaq wants to modernize the plumbing without breaking pipes.

Regulatory Posture

The SEC published the filing for comment in the Federal Register on September 22, 2025.

As of the most recent docket activity:

  • The SEC has not approved or disapproved the proposal.

  • The Commission extended its decision period.

  • At least one detailed comment letter urges the SEC to consider disapproval proceedings, citing concerns about transparency and the lack of public detail regarding DTC’s tokenization services.

The regulatory process remains open, and the outcome is uncertain.

The Larger Context: DTCC’s Work on Tokenization

While the Nasdaq filing does not specify technical infrastructure, DTC and its parent, DTCC, have publicly acknowledged ongoing work on tokenization, including:

  • A 2025 memorandum to the SEC describing early-stage tokenization service design.

  • Congressional testimony in 2024 emphasizing both the potential efficiencies of tokenization and the need for strong controls, resiliency, and regulatory alignment.

  • Broader industry initiatives focused on integrating tokenization into the existing clearance and settlement framework.

These efforts confirm that the plumbing needed for tokenized securities is being developed but not yet finalized.

What This Proposal Means for the Market

If the SEC ultimately approves the filing, investors and market participants would gain the option — not the obligation — to hold a blockchain-based representation of a Nasdaq-listed security.

But from the perspective of trading, price discovery, protection of investors, and regulatory oversight:

Nothing really changes. And that’s the point.

In my view, Nasdaq’s proposal is a controlled, incremental step toward incorporating blockchain technology into the U.S. securities markets. It does not seek to decentralize anything. It does not weaken regulatory supervision. It is a carefully contained experiment designed to allow tokenized ownership to exist inside the same trusted market infrastructure that already functions at scale.

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Here’s a collection of sources I studied during my preparation of this article. If you want to dive deeper, here you go:

K. Braeden Anderson
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