The Securities and Exchange Commission approved a proposal by Nasdaq Inc. (NASDAQ:NDAQ) allowing certain stocks to be traded and settled in tokenized form on the exchange.

SEC Greenlights Proposal For Blockchain-Based Stocks

The SEC found that the proposal was “consistent” with the Securities Exchange Act of 1934 and rules governing national securities exchanges, according to a filing. The initial scope includes Russell 1000 constituents and exchange-traded funds that track the S&P 500 and Nasdaq 100.

Nasdaq proposed to the SEC in September that its member firms be permitted to tokenize “certain” equity securities and exchange-traded products.

The proposed changes will enable investors to choose whether they want the stock represented in a tokenized form or a traditional digital form. If they opt for the tokenized method, the Depository Trust Corporation will do the backend work and list the asset as a blockchain-based token.

All shares, irrespective of their form, will be traded on Nasdaq under the same order entry and execution rules.

A Sustained Push Toward Tokenization

This approval by the SEC comes in the wake of Nasdaq’s announcement of a partnership with cryptocurrency exchange Kraken to develop a framework for trading tokenized stocks and ETFs.

Earlier this year, Nasdaq deepened its partnership with CME Group to relaunch the Nasdaq Crypto Index as the Nasdaq CME Crypto Index.

Previously, the New York Stock Exchange announced its plans to develop a platform for the trade and on-chain settlement of tokenized U.S.-listed stocks and exchange-traded funds, offering 24/7 operations and instant settlement.

Price Action: Shares of Nasdaq dipped 0.51% in after-hours trading after closing 1.19% lower at $85.44 during Wednesday’s regular trading session, according to data from Benzinga Pro.

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