The U.S. Securities and Exchange Commission (SEC) approved a Nasdaq rule change on March 18, 2026, that will permit the trading of tokenized listed securities under the Depository Trust Company (DTC) pilot program. This move represents a structured step towards compliant on-chain equity trading.
The regulatory process for this decision began on September 2025 when the SEC first noted Nasdaq's proposed rule change (SR-NASDAQ-2025-072). This was followed by the initiation of a formal review in December 2025 and a review of a second amendment in January 2026. Furthermore, this approval builds upon the SEC staff's "no-action letter" issued on December 11, 2025, concerning DTCC tokenization services.
Scope and Limitations of the Approval
While some social media posts have interpreted this order as a broad "green light" for tokenized stock trading, its scope is actually quite limited. The approval is restricted to DTC participants and DTC-eligible securities and is not intended to establish a universally applicable on-chain listing regime.
The initial set of eligible securities includes certain Russell 1000 index components and major index ETFs that meet the DTC pilot program's requirements. Not all stocks listed on Nasdaq will be eligible for tokenized trading under this order.
If DTC is unable to execute a tokenization request for any reason, trades will settle in traditional, non-tokenized form according to the standard T+1 settlement cycle. This fallback mechanism ensures that existing market operations are not disrupted.
Tokenized Trading Not Immediately Launching
The SEC's approval itself does not trigger the immediate commencement of trading. Nasdaq has stated that the rule will only become effective once DTC's infrastructure and post-trade settlement services are fully operational.
Additionally, the exchange must provide at least 30 days' advance notice to its members before tokenized trading begins. A specific go-live date has not yet been announced.
In a press release on March 9, Nasdaq Executive Vice President Tal Cohen stated, "Public companies should always be at the center of the equity market ecosystem," indicating the exchange's intention to maintain issuers' central role within any tokenization framework, rather than ceding ground to decentralized alternatives.
Arjun Sethi commented on Nasdaq's equity token design, noting that "tokenization improves market infrastructure at the asset level," emphasizing efficiency gains in settlement and custody rather than a fundamental change in how securities are regulated.
Regulatory Context and Future Outlook
This approval is part of an evolving regulatory landscape. SEC Commissioner Hester Peirce stated in July 2025 that tokenized securities remain securities under federal law. She described the DTC pilot in December 2025 as a gradual step towards moving the market on-chain.
The next specific milestones involve DTC completing its infrastructure build-out and Nasdaq providing the 30-day advance notice to its members. Until then, all Nasdaq securities will continue to trade in their traditional form.