This time, TradFi showed no hesitation, as Nasdaq is sprinting towards SEC approval for 'stock tokenization'.
Written by: Frank, MSX Research Institute
‘Tokenization will ultimately engulf the entire financial system.’
For Nasdaq, this is no longer a hollow slogan, but the most urgent strategic task at hand.
On November 25, Nasdaq's head of digital assets strategy, Matt Savarese, clearly stated in an interview with CNBC that securing SEC approval for the tokenized stock plan is a top priority, and they will 'push forward with the fastest speed'. At the same time, he cautiously emphasized that Nasdaq is not trying to disrupt the system, but rather to promote asset tokenization in a 'responsible' manner within the regulatory framework.
But no matter how mild the words, actions do not lie.
While other giants are still cautiously observing or conducting edge testing, Nasdaq, standing at the core hub of TradFi, seems to have already made its decision and has begun to aggressively accelerate.
I. It's not Crypto that's flooring the gas pedal, it's Nasdaq.
Rewinding to September 8, three months ago, Nasdaq submitted a landmark rule change application to the U.S. Securities and Exchange Commission (SEC). The core objective, at first glance, seemed quite radical: to allow investors to directly trade stocks of publicly traded companies such as Apple and Microsoft, which exist in the form of blockchain tokens, and exchange-traded products (ETPs) on the Nasdaq main board.
However, a closer look at the numerous details disclosed in this application reveals that beneath the radical exterior, Nasdaq offers a highly politically astute "hybrid structure" solution. This is thanks to its deep understanding of the SEC's red lines, thus avoiding a complete overhaul and instead cleverly separating "trading" from "settlement."
The crux of the entire application lies in treating tokenized stock transactions as regular stock trading, where each tokenized stock transaction is cleared and settled through a Depository Trust Company (DTC), and "trade matching is still completed in the same order book, and even if an order contains tokenized stock, it will not affect the priority of the exchange in executing that order."
In other words, on the front end, everything remains the same, the investor experience is almost unchanged, the transaction matching is still completed in the same order book, tokenized stock orders do not receive additional priority, the transaction is still counted in the National Best Bid and Offer (NBBO), and those who purchase tokens will fully obtain all shareholder rights, including voting rights and liquidation rights.
The real revolution occurs at the back-end settlement layer. Once a transaction is completed, Nasdaq will not follow the traditional approach, but will instead pass the instructions to the Depository Trust Company (DTC) to initiate a completely new on-chain process:
Lock-in mapping: After a transaction is completed, Nasdaq transmits the settlement instructions to the DTC;
On-chain minting: DTC locks traditional shares in a dedicated account, and the system mints tokens of equivalent value on-chain;
Instant distribution: Tokens are instantly allocated to the broker's blockchain wallet;
In short, tokenized stocks are completely consistent with traditional stocks in terms of trading, with the only difference being the introduction of on-chain mapping at the settlement layer. This design means that tokenized stocks are not outside the National Market System (NMS) but are seamlessly integrated into the existing regulatory and transparency framework. It utilizes the existing large liquidity pools and introduces blockchain as a new generation of settlement tool.
Intriguingly, just days before Nasdaq filed its application (September 4), the U.S. SEC released its annual agenda, explicitly proposing to reform cryptocurrency policy, including "restructuring cryptocurrency regulation" and "reducing the overly complex rules criticized by Wall Street."
This timing "coincidence" makes it hard not to think that Nasdaq precisely timed the event, sensing the subtle shift in regulatory direction. It could even be said that Nasdaq is well aware of the SEC's bottom line, and therefore cleverly balanced "innovation" and "stability" in its design.
In an interview, Chuck Mack, Senior Vice President of Nasdaq North America, succinctly explained the essence of this "hybrid architecture": "We are not trying to replace the existing system, but to provide the market with another more efficient and transparent technological option. Tokenized securities are simply the same asset expressed in a new form on the blockchain."
Ultimately, in Nasdaq's design, tokenization is not about "starting from scratch," but rather a gentle yet firm upgrade of the underlying infrastructure—capable of leveraging the existing market structure and trading system while enabling blockchain to become a new generation of custody and settlement tools.
According to the plan, once the infrastructure for DTC is in place, US investors may officially see the first tokenized securities traded on Nasdaq by the end of the third quarter of 2026.
At that time, Wall Street's books may be turned to a completely new level.
II. Radical Wall Street, why now?
In fact, Nasdaq is not the first to "take the plunge," but its entry marks the beginning of the decisive stage of this competition.
Looking across Wall Street, a quiet movement toward blockchain has already begun: JPMorgan Chase launched the Onyx platform to facilitate inter-institutional settlements, BlackRock issued the tokenized government bond fund BUIDL on Ethereum, and Citigroup is also exploring cross-border payments and custody of tokenized assets.
But why is it now that Nasdaq is taking the lead?
A quote from BlackRock CEO Larry Fink perhaps captures part of the truth: "Since the invention of double-entry bookkeeping, ledgers have never been so exciting." In essence, reviewing centuries of financial history is a history of the evolution of accounting technology.
In 1602, the Amsterdam Stock Exchange was established, marking the birth of the world's first stock market, with paper certificates becoming the basis of trust.
In 1792, the Treaty of the Sycamore was signed, the New York Stock Exchange was established, and Wall Street entered the era of paper contracts and manual bidding.
In 1971, NASDAQ was established, marking the birth of the world's first electronic stock trading market;
In 1996, the DRS (Direct Register System) was launched, ushering in a de facto paperless era for US stocks;
Today, blockchain has become the latest holder of this baton. When the technology accumulates to a critical point, change will naturally occur.
Even more interestingly, the regulatory stance is also undergoing a subtle shift. On November 12, the U.S. SEC website published the full text of Chairman Paul S. Atkins' latest speech, in which a passage was interpreted by the market as a "birth certificate" for the tokenization of U.S. stocks:
"Whether a stock is represented by paper certificates, a depository trust and clearing company (DTCC) account, or a token on a public blockchain, it is still essentially a stock; a bond does not cease to be a bond simply because its payment flow is tracked through smart contracts. It is easy to understand that a security is always a security, regardless of its form."
Source: U.S. SEC website
To put it bluntly, in the eyes of regulators, tokenized securities are still securities, but as long as the legal nature of securities is not changed, technological upgrades are no longer off-limits.
It is precisely because of the combined support of technology and regulation that Nasdaq is eager to promote tokenization in order to address three core pain points in the capital market that traditional architectures can no longer solve:
Settlement efficiency: From T+1 or even longer, to T+0 (real-time clearing), completely eliminating counterparty risk. According to analysis, this will save global infrastructure tens of billions of dollars in operating costs every year.
24/7 Trading: Breaking the 6.5-hour trading limit, enabling 7x24 global liquidity, and solving the serious problem of liquidity fragmentation;
Asset programmability: Write dividends, voting, and compliance checks into smart contracts to expand automated governance and more composable space;
But beyond technological advancements, I believe there's an even more crucial point: this is essentially a restructuring of the profit distribution model. After all, within the existing TradFi system, Nasdaq is actually at the bottom of the value chain.
Investors trade through brokers or securities firms, who take the lion's share of transaction fees, financing interest, and cash flow (2C business); while Nasdaq, as an exchange, earns more from matching, clearing and settlement, and listing service fees (2B business).
To put it figuratively, brokerages are eating the meat, while Nasdaq can only drink the soup.
However, once US stocks are tokenized in the future and issued and circulated directly on Nasdaq's own blockchain or permissioned blockchain, the situation will be reversed instantly. It will cut into the entire chain of data and revenue from issuance, circulation to settlement. At that time, Nasdaq will no longer be just a matching platform. Its value capture method will change from a single "fee" to "direct commission + value-added services + network effect revenue".
If Nasdaq were to launch its own on-chain trading venue (permissioned blockchain DEX), it would almost perfectly replicate the closed loop of top crypto CEXs: user orders → matching transactions → on-chain accounting → clearing and settlement → asset custody, a complete one-stop solution.
This means that the huge pie that was originally scattered across "bank and securities custody funds + clearing and settlement + securities firms' front-end customer service" could all be integrated onto the same chain. For existing TradFi heavyweights (securities firms and custodians), this is absolutely disruptive, but for Nasdaq, it is a historic opportunity to keep the profits within its own fold.
III. Where will the storm sweep next?
Objectively speaking, the tokenization of US stocks is no longer just a narrative, but has long become a powerful historical trend.
Slogans can be deceiving, but actions won't. While Nasdaq is accelerating, various players have already entered the fray. From Robinhood launching tokenized private equity to Kraken listing US stock tokens through XStocks, from Galaxy Digital putting its own stock on a public blockchain to SBI Holdings setting up on-chain trading in Japan, both crypto-native companies and traditional financial giants are vying for a first-mover advantage in this emerging field of tokenized stocks.
Ironically, just as Nasdaq was making great strides, it also faced resistance from the native crypto world. On October 16, Ondo Finance, a leading RWA issuance protocol, sent an open letter to the U.S. SEC, urging it to postpone the approval of Nasdaq's rule change application, citing "transparency" as the reason and accusing Nasdaq of providing a vague description of the settlement process.
Source: Ondo Finance
This inevitably leads one to think that the discussion behind it goes beyond just compliance, and also reflects Ondo's competitive anxiety about the potential squeezing of its own ecosystem niche. If Nasdaq directly issues the most credible and liquid native tokenized stocks (such as Tokenized-AAPL), then the survival space of protocols like Ondo that focus on "middle-layer issuance and underwriting" will inevitably be greatly compressed.
To put it bluntly, why would investors buy assets packaged by "middlemen" instead of directly buying Nasdaq's native tokenized stocks?
With the entry of established players like Nasdaq, the barriers to upstream asset issuance will be lowered, and all RWA issuance protocols will face a similar "disintermediation" blow. This is the deeper crisis in the second half of the RWA race, namely that simple tokenized stock issuance is no longer attractive.
Especially now that DEXs like Hyperliquid are starting to siege US stock market liquidity through HIP3 perpetual contracts, the appeal of simply holding tokenized stocks is decreasing. However, this is not the end of the US stock tokenization sector; on the contrary, it is a historic opportunity for "downstream protocols."
Nasdaq is responsible for "asset creation" (issuance and settlement), but it cannot monopolize all "asset playing" (trading and application) scenarios. Even though some people worry that Nasdaq will launch an official DEX and squeeze the survival space of other protocols, just as there is Uniswap and Hyperliquid on the blockchain, the future of trading, derivatives, lending, and market-making services based on Nasdaq tokenized US stocks will be a blue ocean of innovative freedom.
Decentralized protocols and compliant trading platforms that are close to traffic entry points and build trading capabilities around on-chain composability are likely to be the ones who truly reap the benefits of this wave. Of course, no one can guarantee that MSX will be the one to emerge victorious in the end, but the general idea of "downstream is king" is correct.
In conclusion
Interestingly, on December 1st, The Economist published an article discussing how RWA tokenization is changing finance, proposing a rather symbolic analogy:
If history can serve as a reference, the stage of tokenization we are in today is roughly equivalent to the internet in 1996—when Amazon sold only $16 million worth of books, and three of the "Magnificent 7" that dominate the US stock market today have not even been established yet.
From yellowed paper certificates to the electronic SWIFT system in 1977, and now to the atomic settlement of blockchain, the evolution of financial infrastructure is replicating, or even surpassing, the speed of the internet.
For Nasdaq, this is a high-stakes gamble where "if you don't revolutionize yourself, you will be revolutionized"; for the Crypto industry and new RWA players, this is not only a brutal reshuffling of the fittest, but also a historic opportunity comparable to betting on the next "Amazon" or "Nvidia" in the 1990s.
The future is still far off; the arrow has only just been shot.
