Nasdaq Embraces On-Chain Culture: Full Analysis of Proposal and New Capital Market Narrative
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Nasdaq Embraces On-Chain Culture: Full Analysis of Proposal and New Capital Market Narrative
If tokenized stocks can extend to mainstream exchanges like Nasdaq, enabling trading alongside traditional stocks, it means new opportunities are emerging for investors.
Navigating Web3 tides with focused insightsAuthor: CoinW Research Institute
On September 8, 2025, Nasdaq submitted a striking proposal to the U.S. Securities and Exchange Commission (SEC), planning to allow "tokenized securities" to be traded on the Nasdaq exchange under the same trading rules and execution priority as traditional securities. This may appear to be merely a rule revision, but it could mark a pivotal step by Wall Street toward embracing blockchain technology.
1. Key Points of the Nasdaq Proposal
Allowing Tokenized Stocks and Traditional Stocks to Trade on the Same Platform
In its latest proposal, Nasdaq stated its intention to permit trading in tokenized securities under the exact same rules as conventional securities. This means that shares issued by the same company—whether in traditional form or as blockchain-based tokens—could be bought and sold on Nasdaq under identical rules, with equal matching priority and shareholder rights. This not only ensures price discovery and liquidity but also makes the trading experience nearly indistinguishable for investors, eliminating concerns about purchasing a "downgraded" version of stock. It signals a significant acceleration in the convergence between traditional finance and the blockchain world.
Notably, Nasdaq emphasized that only tokenized securities with rights fully equivalent to traditional securities would qualify for such treatment. This implies that voting rights, dividend rights, liquidation rights, and disclosure rights granted through tokenized securities must be exactly the same as those associated with direct ownership of traditional securities. In other words, tokenization changes only the technical method of holding and trading—not the investor's legal status or economic interests.
Clear Disclosure of Rights Differences; Clearing Systems Must Be Able to Identify Them
To prevent confusion, Nasdaq requires that any differences in rights between tokenized and traditional securities must be clearly labeled, enabling clearing institutions and investors to identify them easily. Clearing and settlement will still occur through existing systems like the Depository Trust Company (DTC) in the U.S., though these systems are expected to eventually support on-chain settlement. This allows both institutional and retail investors to access on-chain assets within a familiar trading environment without worrying about settlement risks.
Infrastructure Compatibility Without Major System Overhauls
The proposal does not require rebuilding the entire trading system but involves only minor adjustments to existing rules, maintaining consistency in trading, fees, order-matching priority, market surveillance, and other aspects. This helps ensure liquidity is not fragmented and enables tokenized securities to become an integrated part of the traditional market.
Execution Priority and Market Participation Remain Unchanged
Regardless of whether investors choose traditional or tokenized forms, order processing methods, priority rankings, fee structures, routing strategies, market monitoring, and the NBBO (National Best Bid and Offer) mechanism will remain identical to those for traditional securities. Tokenized stocks will not receive different execution treatment due to their format.
Ensuring Market Stability and Transparency
Nasdaq stressed that tokenized trading will not disrupt market structure or public pricing mechanisms, cause fragmentation of liquidity, or reduce investor protections. All transactions will continue to be monitored and reviewed under regulatory frameworks including Nasdaq and FINRA, preserving market transparency and oversight mechanisms to prevent market manipulation.
2. Why This Is a Significant Event
Historically, mainstream exploration in the RWA sector has focused on products like stablecoins and tokenized government bonds—such as on-chain versions of U.S. Treasuries and corporate bonds. The core idea has been to map real-world assets (dollars, bonds) onto blockchains so users can hold, transfer, and settle them more efficiently within the crypto ecosystem. Thus, most so-called "tokenized stocks" seen in the past were merely price proxies, not actual equity representations, and did not confer key rights such as voting or dividends—meaning investors didn't truly own the underlying stock.
The Nasdaq proposal is fundamentally different: it mandates that tokenized stocks must have rights identical to traditional stocks to enter the same trading system. This indicates that investors holding tokenized stocks would enjoy the same rights as direct shareholders—an authentic form of "on-chain stock."
More importantly, this proposal signifies that traditional financial markets are beginning to embrace blockchain as part of their core trading infrastructure, moving beyond experimental or over-the-counter stages. If implemented, it could dramatically improve market efficiency, lower settlement costs, and encourage broader participation from both institutions and retail investors in blockchain-based assets. It represents not just recognition of blockchain technology but potentially a turning point in the deep integration of traditional finance and the crypto world.
3. Industry Developments Aligning With the Trend
The Nasdaq proposal is not an isolated event but rather a continuation of the broader financial industry’s exploration of tokenization.
On September 3, 2025, Galaxy Digital announced a partnership with Superstate, an SEC-registered transfer agent, to tokenize its Class A common stock GLXY directly via the Opening Bell platform and deploy it on the Solana blockchain. This marks the first time a U.S. publicly listed company has actively moved its real stock onto a blockchain, granting token holders the same full legal and economic rights—including voting, dividends, and liquidation rights—as traditional shareholders, achieving true "on-chain stocks."
In the same month, Ondo Finance launched Ondo Global Markets, offering non-U.S. investors tokenized versions of over 100 U.S. equities and ETFs, enabling 24/5 continuous trading and 24/7 free transfers. These tokens are pegged 1:1 to real stocks, custodied by U.S.-compliant brokers, and backed by traditional exchange liquidity. Currently operating on Ethereum, the platform plans to expand to Solana and BNB Chain, aiming to support over 1,000 assets by year-end. This means global investors can access U.S. stock markets around the clock via blockchain wallets and freely use tokenized securities in DeFi applications.
Previously, Robinhood pioneered tokenized U.S. stocks and ETFs in Europe, covering more than 200 instruments, and plans to bring private company equities such as SpaceX and OpenAI onto the blockchain, testing tokenized trading for private equity. Kraken also launched its xStocks product, supporting tokenized versions of over 50 U.S. stocks and ETFs on Solana, allowing users to trade 24/7 and withdraw holdings into self-custody on-chain.
Together, these developments illustrate a clear trend: traditional capital markets are beginning to integrate with the openness and programmability of blockchain. The most immediate impact of tokenization is breaking down time and geographical barriers, enabling U.S. stocks, ETFs, and even private equity to trade continuously on 24/7 on-chain markets and be embedded directly into DeFi applications as collateral or liquidity tools. This means future global investors won’t be constrained by local exchange hours and will gain richer asset allocation options on-chain. Exploration into stock tokenization has already begun, and if Nasdaq’s proposal is approved, it will provide a much larger stage for these innovations, bringing tokenized securities into the mainstream and accelerating the fusion of traditional finance and blockchain.
4. Potential Impact: A New Narrative for Financial Markets
Stimulus for the Crypto Market
The Nasdaq proposal will undoubtedly inject new momentum into the RWA (Real World Assets) sector. Allowing tokenized and traditional stocks to trade side by side effectively connects crypto technology directly to one of the world’s largest stock markets, vastly expanding market potential and possibly impacting multiple Web3 sectors.
First, DeFi lending and derivatives protocols stand to benefit. Tokenized U.S. stocks and ETFs can serve as high-quality collateral, increasing depth and diversity in lending pools. Users could borrow against or provide liquidity using on-chain stocks of Apple or Tesla, not just stablecoins or native tokens. This improves capital efficiency and could lead to cross-asset collateral products like “on-chain stock + stablecoin” combinations. Derivatives markets will also grow, enabling perpetual contracts and options based on on-chain stocks, making hedging and leveraged trading more accessible.
Second, RWA and asset management protocols will see expanded opportunities. Stock tokenization enriches the RWA asset pool beyond low-risk instruments like Treasuries and commercial paper. On-chain asset managers can create index funds, smart portfolios, or auto-rebalancing strategies incorporating tokenized stocks, giving everyday users low-barrier access to "on-chain ETFs" or thematic investment baskets.
Additionally, projects providing foundational infrastructure for tokenization—such as Chainlink (oracles, price feeds), Avalanche, and Polygon (custody and settlement layers)—are likely to see increased demand and traffic as they become technical enablers of stock tokenization.
Finally, compliance and identity solutions (DeFi KYC, on-chain identity) will gain greater attention. Stock tokenization inherently requires adherence to securities laws, raising the bar for investor accreditation, geographic restrictions, and position disclosures—driving wider adoption of on-chain KYC, verifiable credentials (VC), and compliance modules.
More importantly, this shift may attract institutional capital back to blockchain’s practical utility rather than speculative hype, boosting sentiment in secondary markets and expanding DeFi use cases.
Impacts and Opportunities for Traditional Financial Markets
From the perspective of traditional finance, introducing tokenized stocks could significantly reduce intermediary costs in trading and settlement. Current stock trades typically take T+2 days to settle, involving multiple layers of custodians and clearinghouses. On-chain tokenized stocks, however, could enable near-instantaneous settlement, reducing reliance on intermediaries and improving capital efficiency. For market participants, this translates to higher liquidity, lower capital lock-up, and the possibility of 24/7 trading.
This efficiency gain presents both challenges and opportunities for traditional intermediaries. Brokerages and custodians may see their matching and settlement roles disrupted by disintermediation, but they also have the chance to transform into on-chain custodians or compliance gateways, developing new revenue models. Clearinghouses and central depositories (like DTC) must upgrade their systems to support on-chain settlement—or risk losing their centrality in the financial infrastructure.
For companies, listing stocks on-chain can dramatically lower fundraising barriers and costs, enabling direct access to global investors. Through on-chain smart contracts, firms can update shareholder registers, distribute dividends, and conduct governance votes in real time—reducing manual effort and time while improving corporate governance. Moreover, tokenizing private equity and secondary market shares can enhance liquidity, accelerate exit timelines for venture capital and private equity funds, and reshape valuation and liquidity dynamics in traditional capital markets.
Overall, stock tokenization could push capital markets from a nation- and exchange-centric closed system toward a global, 24/7, decentralized open market. Traditional brokers, clearinghouses, and custodians must proactively adapt to remain relevant in this evolving landscape, while companies should begin planning digital strategies to capture efficiency gains from on-chain financing and governance. As more compliant pathways and technical solutions emerge, this trend appears irreversible—potentially leading to a future where on-chain markets dominate, and the boundaries between traditional and decentralized finance blur further.
5. Risks and Challenges
Regulatory Uncertainty
While the Nasdaq proposal is a positive innovation, it still requires approval from the SEC. SEC review periods lack fixed deadlines, though historically most exchange proposals take 30–90 days, with complex products requiring longer. Key review areas include compliance with the Securities Exchange Act, adequacy of investor protection measures, and reasonableness of trading rules and risk controls. Given the novelty of tokenized stocks, the SEC may initiate multiple rounds of inquiries and revisions, resulting in stricter scrutiny and extended timelines.
Regulators may also worry that tokenized stocks could be used to circumvent certain requirements—such as cross-border investment limits, KYC/AML compliance, or tax reporting. If the approval process drags on or regulatory conditions become too stringent, the entire tokenization timeline could slow down, potentially eroding early-mover advantages.
For example, Ondo Global Markets, mentioned earlier, offers tokenized traditional securities to global investors. To address cross-border compliance, the platform restricts access to non-U.S. investors and uses Reg D and Reg S frameworks to comply with U.S. and international regulations. For KYC/AML, it conducts strict user verification—including identity, address, and tax information—and embeds smart contracts to automatically enforce compliance and trading restrictions. On taxation, it applies withholding taxes on investor returns and provides transparent transaction and tax records to assist with reporting obligations.
Technical and Security Risks
Tokenized stocks mean shareholding and settlement depend on blockchain technology. Vulnerabilities, attacks, or outages in the underlying public chain could directly compromise settlement security and lead to investor losses. Additionally, on-chain identity verification—ensuring only qualified investors can hold assets—poses dual technological and compliance challenges.
Liquidity and Price Control Risks
In traditional markets, pre-market and after-hours trading carry risks of sharp price swings, but limited trading hours concentrate volatility at opening and closing. On-chain 24/7 trading changes this pattern but doesn’t eliminate risk—it transforms it. Instead of concentrated spikes, we may see “continuous low-liquidity fluctuations” and increased “spread arbitrage opportunities.”
On-chain tokenized stocks often have smaller circulating supplies than their traditional counterparts, and early participant composition may be unbalanced, making prices prone to extreme volatility and short-term divergence from traditional market prices. While 24/7 trading enables more continuous price discovery, it doesn’t eliminate risk. Without sufficient market depth or in the face of large trades, prices can still move rapidly and deviate unreasonably.
Controlling on-chain price volatility depends on several conditions. First, adequate liquidity—such as market maker mechanisms—is needed to absorb large trade impacts. Second, circuit breakers can pause trading during abnormal movements to prevent cascading sell-offs. If tokenized stocks have identical rights to traditional stocks and allow free redemption, cross-market arbitrage can naturally anchor prices. For instance, if the on-chain price falls below the traditional price, arbitrageurs buy on-chain and sell traditionally; if higher, they buy traditionally and sell on-chain—profiting from the spread while pushing prices back into alignment.
Furthermore, settlement and clearing efficiency between on-chain and traditional markets affects risk. Delays in upgrading custody or clearing systems could hinder smooth price stabilization. Even with Nasdaq using a unified order book, initial phases may still see imbalanced liquidity, price spreads, or arbitrage opportunities—necessitating coordinated technical, market, and regulatory measures to manage risks effectively.
6. Conclusion
If tokenized stocks extend to major exchanges like Nasdaq and trade alongside traditional stocks, new opportunities will emerge for investors. Beyond tracking infrastructure and RWA projects, special attention should be paid to compliant public chains and exchanges actively supporting tokenization—these could become key gateways and beneficiaries as capital markets go on-chain.
In the long term, this trend has the potential to drive the full migration of capital markets onto blockchains, enabling real-time, transparent, and automated trading, settlement, and custody. The integration of Web3 and traditional finance will accelerate further, ushering global capital markets into a new era of greater efficiency and openness.
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