The American stock exchange Nasdaq has requested permission from the U.S. Securities and Exchange Commission (SEC) to trade tokenized securities.
Tokenization involves the conversion of financial assets — stocks, bonds, or real estate — into tokens that can be traded on blockchain systems. This is expected to increase transaction transparency, reduce settlement times, and lower transaction costs, Nasdaq representatives assure. If the regulator approves the exchange's initiative, investors will be able to trade securities for the first time with settlements through blockchain on a major American exchange.
Nasdaq insists: tokenization does not pose security risks for investors. Tokenized instruments should have similar rights and privileges as traditional securities. Then tokenized and traditional assets will use the same order book, following the same execution rules. Otherwise, Nasdaq will treat tokenized assets as separate instruments, each with its own trading conditions.
The American cryptocurrency exchange Coinbase recently applied to the SEC for permission to offer its clients tokenized stocks. Major banks Bank of America and Citi are exploring the possibility of launching tokenized assets, as well as incorporating stablecoins and other blockchain-based financial products. Tokenized securities have already begun trading on several European platforms. However, Nasdaq has criticized such platforms for offering access to American stocks without granting investors actual ownership rights to the shares.
However, the SEC remains cautious. The regulator fears that without adequate oversight, tokenization could create new vulnerabilities and risks to the safety of funds. SEC Commissioner Hester Peirce explained: tokenized stocks must be regulated under existing securities laws.
