The U.S. Securities and Exchange Commission has advanced Nasdaq’s proposed rule change that would allow certain securities to be cleared and settled in tokenized form, bringing blockchain-based post-trade infrastructure closer to mainstream capital markets.
The rule change, filed as SR-NASDAQ-2025-072, would let market participants flag securities for post-trade clearing and settlement through the Depository Trust Company’s tokenization framework. The proposal targets what happens after a trade executes, specifically how ownership records are finalized and delivered.
What the SEC Approved in Nasdaq’s Tokenized Securities Rule Change
Clearing refers to the process of confirming trade details and calculating obligations between buyer and seller. Settlement is the actual transfer of securities and cash. Under Nasdaq’s proposal, both steps could occur in tokenized form for eligible securities, meaning ownership would be represented as digital tokens on an approved blockchain rather than solely through traditional book-entry records.
KEY POINTS
- Nasdaq’s rule filing SR-NASDAQ-2025-072 enables post-trade clearing and settlement of certain securities in tokenized form through DTC.
- The SEC’s Division of Trading and Markets issued a no-action letter to DTC on December 11, 2025, authorizing a three-year tokenization pilot for eligible securities.
- Eligible assets under the DTC pilot include Russell 1000 securities, U.S. Treasury securities, and certain broad-index ETFs, not all listed securities.
The scope is deliberately narrow. Not all Nasdaq-listed securities qualify. Under the DTC pilot framework, eligible assets are limited to Russell 1000 stocks, U.S. Treasury securities, and certain major-index ETFs. DTC retains authority over which blockchains qualify and what conditions apply.
A participant that wants tokenized settlement would select a tokenization flag when submitting a trade. DTC then receives a post-trade instruction to clear and settle in tokenized form. If DTC cannot process the tokenized instruction, the participant makes alternative arrangements through standard settlement channels.
The SEC instituted proceedings on December 12, 2025 to evaluate the proposed rule change. On January 27, 2026, the SEC published a notice tied to Nasdaq’s amended proposal, with a public comment deadline of March 5, 2026. The broader regulatory environment continues to evolve alongside the Federal Reserve’s recent rate decisions, which shape how institutional capital flows into newer asset classes.
Why Nasdaq’s Tokenized Settlement Approval Matters for Markets
The significance lies in who is involved. Nasdaq and DTCC are core pillars of U.S. capital markets infrastructure. When these institutions adopt tokenization, even in pilot form, it signals that blockchain-based settlement is moving from experimental concept to regulated reality.
Nasdaq’s proposal does not operate in isolation. It depends on the SEC Division of Trading and Markets’ no-action letter to DTC, issued on December 11, 2025. That letter authorized DTC to launch a limited three-year pilot of DTCC Tokenization Services, covering certain DTC-custodied securities on approved blockchains.
Nasdaq’s rule filing, amended on January 27, 2026, explicitly ties its tokenized settlement workflow to this DTC pilot. The exchange is not building its own blockchain settlement layer. Instead, it is creating a mechanism for participants to opt into DTC’s tokenization infrastructure at the point of trade execution.
For institutional investors, the development removes a key objection. Tokenized securities handled through DTC carry the same custodial protections and regulatory oversight as traditional book-entry holdings. This is a fundamentally different proposition from buying tokenized assets on unregulated platforms, and it comes at a time when Kraken’s parent company Payward has paused its IPO plans amid ongoing uncertainty in crypto-adjacent public markets.
Not all industry participants were immediately supportive. Ondo Finance initially filed an objection to Nasdaq’s original proposal, citing insufficient detail about how the tokenization process would work. After the DTC no-action letter and related SEC materials became public, Ondo withdrew its objection on December 15, 2025. Peter Curley of Ondo Finance stated in a comment letter that the firm chose to “withdraw our original objection to the Proposal.”
The three-year pilot timeline gives DTC, Nasdaq, and market participants a defined window to test tokenized clearing at scale while regulators monitor the results. If the pilot succeeds with Russell 1000 stocks and Treasuries, it could establish the template for broader tokenization of listed securities.
Developments like Polymarket’s acquisition of Brahma for DeFi infrastructure suggest that traditional and decentralized finance continue to converge from both directions. Nasdaq’s tokenized settlement proposal sits squarely at that intersection, applying blockchain technology within an existing regulated framework rather than attempting to replace it.
The pilot window means concrete results, including settlement speed improvements, error rate comparisons, and participant adoption metrics, will determine whether tokenized clearing expands beyond its current limited scope.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
