The stock exchange plan to support trading tokenized stocks presents new technical hurdles for the SEC and DTCC.
While NASDAQ’s September 8 launch of tokenized stocks has been called Wall Street’s groundbreaking step, experts warn that exchanges could face a major hurdle when adapting blockchain transactions to existing US settlements and regulatory systems.
If approved by the US Securities and Exchange Commission (SEC), this means that tokenized securities will be listed on major US exchanges for the first time. However, as Depository Trust & Clearing Corporation (DTCC) already processes billions of stock transactions every day, experts say integrating blockchain-based settlements can be expensive and complicated.
On April 9th, National Securities Clearing Corporation (NSCC), a sub-division of DTCC that provides clearing, settlement and risk management services to US financial markets, processed a new record of $5.55 trillion transactions.
“The bigger problem is the need for a new settlement tier for trading tokenized stocks. Here, it appears, surprisingly, Nasdaq is relying on DTCC to build a new settlement system.” “This would be expensive and would bring little or no financial benefits to do it against DTCC, as DTCC has already resolved 100% of stock trading on the exchange of US markets.”
He also explained that another challenge is the need for the SEC to adapt and modify tokenization regulations. However, Cohen pointed out that the SEC has shown an appetite for making these changes.
Blockchain and Legacy Infrastructure
Other experts agreed, saying that despite the historic filing, the challenge of connecting blockchain networks to traditional financial systems could slow the deployment.
XTAO founder and CEO Karia Samaroo emphasized that by guaranteeing Nasdaq’s tokenized assets, it can be seamlessly integrated with its legacy infrastructure.
“We also need a clear regulatory framework, especially as it relates to market structures, mainly because it may lack such a framework, which could create greater risk,” Samaroo said. “But that seems to be passing market structure laws in the coming months given the success of the Clarity Act.”
The Clarity Act, which passed in the House of Representatives in mid-July, but awaits passage by the Senate and President Donald Trump, aims to provide a clearer US regulatory framework for digital assets and define its eligibility as a “digital product.”
“It’s important to remember that these stocks are issued as securities and they don’t operate functionally in a way that is different from traditional stock classes,” Incyt CEO and founder Mike Maloney told The Defiant. “These are new issuances, so they represent dilution of existing stocks rather than cross-chain transfers.”
Maloney added that the shares are tied to New Capital Raises and management remains centralized with Deposit Trust Company (DTC), a subsidiary of DTCC and a central securities depository.
Another small but important challenge is Nasdaq’s blockchain choice, according to Kevin Rusher, founder of Real World Asset (RWA) borrowing and lending protocol RAAC.
“Ethereum has seen an increasing number of RWA projects and institutional interest, but it must be a high-throughput tier 2 solution to handle Nasdaq’s orderbook,” Rusher said. “That’s if Nasdaq opts for public blockchains. You might think that the allowed chains have greater control over risk.”
In any case, Rusher added that there are many questions related to infrastructure and interoperability, “You have to iron in the background.”
“Breakthrough for reliability”
However, other experts framed the move as a breakthrough in blockchain reliability and institutional involvement.
“It’s exciting to see this because it means connecting tokenized products through traditional distribution channels, so there are individuals and businesses that are already using that infrastructure. In this case, NASDAQ.”
Krupetsky added that this underscores the importance that tokenized stocks provide the same shareholder rights as traditional stocks.
Also, according to Redstone co-founder Marcin Kazmierczak, the submission shows how much tokenization has been taking place since the early experiments. He says tokenization is gaining momentum for three reasons.
BlackRock currently manages Buidl, a Buidl issued by Securitize and whose total assets per Rwaxyz are over $2.2 billion.
Meanwhile, on the same day as NASDAQ’s SEC submission, Asset Manager Fidelity quietly launched its own MMF dubbed Fidelity Digital Interest Token (FDIT).
These developments strongly suggest that, according to Sumaroo, tokenized stocks are no longer merely emerging asset classes. “Increasingly, they are becoming valuable assets for the institution,” she said. “Getting recognition from legacy names like Nasdaq encourages more public trust and institutional adoption across the crypto industry. In short, Nasdaq is ultimately pushing cryptography where it is needed.”
The competition gets hot
The NASDAQ movement continues to heat up competition for tokenized stocks, with many crypto-born companies competing for market share.
Xstocks, a Solana-based platform developed by Backed, was launched on June 30th, allowing users outside the US to trade blockchain-based versions of ETFs with dozens of 1:1 stocks and ETFs through the underlying securities. Kraken currently offers Xstocks in Solana, Tron, BNB chain and Ethereum.
The others quickly followed. In June, Gemini partnered with Dinari to provide tokenized Strategy (MSTR) stocks to European users, with immediate tokenized inventory and ETF expected. Robinhood is also speaking out about its plans to offer more than 200 tokenized US stocks to European investors, expanding to 2,000 by the end of 2025.
“The main difference between the offerings already in existence and the NASDAQ proposal is that tokenized shares traded on US exchanges give holders the same rights to own the company’s shares,” Rusher said. “To date, this has been the biggest criticism of existing products, like the tokenized private stock token launched by Robin Food earlier this year.”
In addition to being available in major national exchanges, he adds that the move will “will be broadly accessible in ways that simply cannot afford wide access to retail investors,” and also offers extra peace of mind regarding legitimacy and compliance.
Rikka’s managing member and founder Charlyn Ho said that unlike existing platforms such as Galaxy, Backed’s Xstocks and Dinari, stock ownership is a flashy way of trading on the blockchain, “you can trade stock ownership” – the NASDAQ approach allows you to buy traditional shares.
“Tokenized securities are cleared and resolved through depositary trust companies and preserved standard investor protection,” she said. “In addition, the regulatory environment operated by NASDAQ is a long-standing regulated exchange that works directly with SEC, DTC and FINRA, making it clearer and more established than new DEFI entrants.”