SEC Approves Nasdaq Pilot for Blockchain-Based Token Settlement, Cutting 2-Day Cycle
The SEC approved a plan allowing certain Nasdaq-listed securities to settle as blockchain-based digital tokens under a pilot program, with tokenized shares using the existing order book and DTC clearing. Token settlement can compress the two-day cycle to near-instant execution while retaining current surveillance, reporting and investor rights.
1. SEC Approval and Pilot Structure
The SEC granted conditional approval for Nasdaq’s pilot on March 18, enabling eligible securities to trade and settle as blockchain-based tokens. The framework retains each share’s existing ticker, order book placement and DTC clearing oversight while introducing digital token settlement.
2. Tokenization Mechanics
Under the pilot, tokenized shares coexist with traditional shares on the same order book, carrying identical prices, identification numbers and shareholder rights. Only the settlement process shifts from the Depository Trust Company’s ledger to near-instant blockchain-based token transfers.
3. Benefits and Competitive Context
Blockchain settlement can reduce the standard T+2 cycle to near-instant confirmation, offering significant value for institutional investors managing large, cross-border positions. Nasdaq’s move intensifies competition with Intercontinental Exchange’s tokenization initiatives and expands its partnership network for blockchain share issuance.