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Nasdaq Seeks SEC Green Light to Launch Tokenized Stock Market – Trillions Coming to Crypto?

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Nasdaq is asking U.S. regulators to approve a rule change that would enable the change to checklist and commerce tokenized variations of shares, marking probably the most formidable makes an attempt but to carry blockchain expertise into the guts of American fairness markets.

In a filing submitted Monday, the world’s second-largest inventory change requested the Securities and Exchange Commission (SEC) amend current guidelines, together with the definition of a safety, to allow tokenized shares to be traded below the identical execution and documentation necessities as conventional equities.

The proposal would nonetheless require a public remark interval and SEC approval earlier than any adjustments might take impact.

SEC Review of Nasdaq Tokenization Plan Could Reshape Equity Trading

Nasdaq outlined in its submission that tokenized shares ought to carry the identical rights and protections as their underlying securities.

The change proposed that tokenized property be clearly labeled in order that clearing corporations and the Depository Trust Company, which handles settlement, might course of orders in the identical method they do with standard shares.

Tokenized securities, it added, could be prioritized equally with conventional property when trades are executed.

The transfer goes past a technical adjustment. It addresses elementary questions on how shares are issued, outlined, and settled.

“The resolution, which is detailed within the proposal, is straightforward, leverages the present infrastructure, and market construction,” Nasdaq Chief Financial Officer Sarah Youngwood mentioned through the Barclays monetary providers convention.

If permitted, the change would carry tokenized shares straight onto regulated U.S. markets, inserting blockchain expertise on the core of fairness buying and selling reasonably than on the periphery.

That might assist reply whether or not tokenization turns into a normal a part of Wall Street’s infrastructure or stays confined to area of interest crypto platforms.

Nasdaq’s submitting comes as U.S. regulators undertake a extra open stance towards digital property.

SEC Chairman Paul Atkins has directed the company to develop clear guidelines on when digital property qualify as securities, whereas Commissioner Hester Peirce lately mentioned the regulator is prepared to work with tokenization corporations, supplied they disclose the character of the property being digitized.

Tokenized securities are digital representations of shares that may be traded on a blockchain. Advocates argue they might deepen liquidity, assist fractional possession, and prolong entry to abroad buyers.

Tokenization additionally raises the potential for near-instant settlement and 24/7 buying and selling, in contrast with conventional exchanges that shut in a single day and on holidays.

Financial heavyweights together with BlackRock, Franklin Templeton, and KKR have experimented with tokenizing parts of their funds, although typically by means of intermediaries.

Most tokenized shares to date have been issued by third events reasonably than the businesses themselves, creating authorized and regulatory problems. Nasdaq, in its submitting, cautioned that issuers shouldn’t be disadvantaged of management over how their shares are traded.

Skeptics be aware that adoption has to date been restricted. JPMorgan Chase lately advised purchasers that tokenization of bonds and different property has but to achieve traction past crypto-native corporations. Citadel Securities has additionally urged regulators to proceed cautiously, warning of dangers if clear guidelines are usually not established.

Despite these considerations, Nasdaq executives say they see a possibility to “bridge the hole between the digital-asset and traditional-asset worlds.” President Tal Cohen mentioned the problem is to guarantee tokenization evolves with investor protections at its core.

The proposal comes amid rising world demand for tokenized real-world property, with abroad platforms already providing tokenized variations of U.S. equities and exchange-traded funds to buyers overseas.

Approval from the SEC would mark the primary main step towards integrating the identical expertise straight into U.S. markets.

Global Regulators Face Growing Pressure as Tokenized Equities Surge

The World Federation of Exchanges (WFE), representing major stock exchanges worldwide, has urged regulators to tighten oversight of tokenized equities amid considerations over investor safety and market integrity.

In a letter to watchdogs together with the SEC, the European Securities and Markets Authority (ESMA), and IOSCO’s Fintech Task Force, the WFE warned that blockchain-based shares “mimic” equities with out conferring shareholder rights or conventional safeguards.

The group known as for securities legal guidelines to apply to tokenized property and for clearer frameworks on possession and custody.

Tokenized equities, which symbolize firm shares through blockchain-based tokens, have grown quickly this 12 months.

According to RWA.xyz, the market worth of tokenized shares has surged past $465 million, with month-to-month switch volumes climbing greater than 280% to $287 million. Research from CoinGecko shows the sector has expanded almost 300% for the reason that begin of 2024.

Platforms akin to Robinhood, Kraken, and Coinbase are testing new merchandise tied to tokenized securities. In July, Robinhood’s shares rose 26% after launching tokenized equities and increasing into crypto infrastructure.

Meanwhile, Ondo Finance rolled out Ondo Global Markets last week, providing entry to over 100 tokenized U.S. shares and ETFs for worldwide buyers.

Japanese conglomerate SBI Holdings and Startale Group also announced plans to build an on-chain trading platform for tokenized shares and real-world property, concentrating on what they estimate might grow to be an $18.9 trillion market by 2033.

While advocates spotlight advantages akin to 24/7 buying and selling and decrease prices, regulators warn of authorized and operational dangers.

ESMA govt director Natasha Cazenave said tokenized assets still require robust safeguards:“Tokenized securities are nonetheless securities.”

The publish Nasdaq Seeks SEC Green Light to Launch Tokenized Stock Market – Trillions Coming to Crypto? appeared first on Cryptonews.

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