Nasdaq Gains Approval for Blockchain-Powered Tokenization Pilot

The US Securities and Exchange Commission (SEC) has given its approval for Nasdaq to move forward with a tokenization pilot program. This program is designed to explore the use of blockchain technology in settling securities within the existing regulated market system.

The SEC's approval allows Nasdaq to participate in the Depository Trust Company (DTC) pilot, which will examine how tokenized shares settle within the current market system. Tokenized settlement involves recording shares as digital tokens on a blockchain-based system, while still adhering to current market rules and regulations.

As part of the pilot, participants will have the option to opt for tokenized settlement through an order flag. Both tokenized and normal shares will continue to trade against the same order book and retain the same priority in terms of price.

The program is expected to focus on large and active stocks, including those listed on the Russell 1000 Index, as well as some exchange-traded funds (ETFs). The goal of the pilot is to test the efficiency and safety of using blockchain technology in settlement processes, with a potential long-term aim of reducing costs and increasing speed.

The SEC's approval marks an important step forward for Nasdaq and the broader financial industry. If successful, this program could pave the way for wider adoption of tokenized stocks and increased use of distributed ledger technology in regulated markets.