Nasdaq's Vision for Tokenization
Nasdaq aims to integrate tokenized stocks within the existing traditional securities system, rather than replace it. The exchange's strategy is to upgrade the stock market using blockchain technology without migrating capital away from traditional markets. Matt Savarese, head of digital asset strategy at Nasdaq, emphasized that the exchange is seeking swift approval for its tokenized-stock framework, advocating for a model that mirrors the stock market's structure rather than adopting a decentralized finance (DeFi) approach.
SEC Approval as the Key Determinant
The Securities and Exchange Commission's (SEC) decision on Nasdaq's rule-change proposal, filed on September 8, will be crucial for the exchange's tokenization plans. Savarese indicated that Nasdaq is committed to a cooperative approach, aiming to address SEC requests and public comments promptly. The exchange is positioning tokenization as a continuation of existing practices, ensuring that tokens represent shares already listed and that investor protections, disclosure requirements, and listing rules remain unchanged. This approach signifies Nasdaq's belief that blockchain technology will enter the financial sector through regulatory channels.
Divergent Reactions from the Crypto Industry
The crypto industry's response to Nasdaq's initiative has been varied. Some view it as a significant validation, with Galaxy Digital, a Nasdaq-listed company, having already tokenized its equity on Solana. This was described by Galaxy Digital CEO Mike Novogratz as the start of a structural shift in capital markets. However, others express caution. Dragonfly partner Rob Hadick warned that if tokenized shares operate on permissioned chains or Layer 2 solutions controlled by large institutions, the primary benefits might accrue to traditional finance (TradFi) rather than public blockchain networks like Ethereum. This perspective suggests that such a development could benefit Wall Street more than the broader crypto economy. The core of the disagreement lies not in whether tokenization will occur, but in who will ultimately profit from it.
A Long-Awaited Technological Evolution
Nasdaq has a history of driving technological change in finance, having pioneered electronic trading. Savarese frames tokenization as the next logical step in this evolution, focusing on integrating blockchain within regulated securities frameworks rather than forcing the existing financial system onto public blockchains. This contrasts with some crypto proponents, such as Vlad Tenev of Robinhood, who foresee tokenization fundamentally reshaping the entire financial system. Nasdaq, in contrast, offers a more measured approach: enhancing the existing system with new infrastructure. The ultimate trajectory of tokenization may depend on whether investors prioritize disruption or modernization, and consequently, whether the crypto industry gains influence or observes Wall Street capturing the associated value.