The Dec. 4 meeting of the SEC’s Investor Advisory Committee opens with a question the agency has spent years avoiding: “What does it actually look like when publicly traded equities live on a blockchain?”
Not as wrapped derivatives on offshore exchanges, not as speculative tokens detached from shareholder rights, but as registered securities trading inside the same regulatory framework that governs Apple shares today.
The two-hour panel, titled “Tokenization of Equities: How Issuance, Trading, and Settlement Would Work with Existing Regulation,” assembles market-structure architects from Nasdaq, BlackRock, Coinbase, Citadel Securities, Robinhood, and Galaxy Digital to sketch that path in public for the first time.
The timing reflects pressure the SEC can no longer deflect. Nasdaq recently filed a formal proposal to trade tokenized versions of listed stocks alongside traditional shares on the same order book, arguing that blockchain settlement requires no carve-outs from the national market system.
Commissioner Hester Peirce made clear in July that tokenization “does not have magical abilities to transform the nature of the underlying asset.” Additionally, tokenized securities remain securities and are subject to the full federal regime.
What Dec. 4 tests is whether that framing can survive contact with implementation details: Who holds the keys? How does the NBBO work when trades settle in seconds instead of two days? Can you short a token the same way you short a share?
The compliant stack: same rules, different plumbing
Nasdaq’s blueprint offers the clearest view of what “inside the system” tokenization looks like. The exchange proposes allowing listed equities to trade in either traditional digital form or as tokens, with both versions sharing the same CUSIP, execution priority, and economic rights.
The token lives at the settlement layer. Issuers still register under the Securities Act, exchanges still operate under the Exchange Act, broker-dealers still route orders through consolidated feeds, and the Depository Trust Company (DTC) still guarantees delivery.
Blockchain replaces the back-end ledger, not the front-end rulebook.
That structure keeps tokenized equities inside Regulation NMS, which means trades still contribute to the national best bid and offer, market makers still face quote obligations, and surveillance still flags wash trades and spoofing.
Nasdaq warns that parallel venues outside NMS would fragment liquidity, undermine price discovery, and leave issuers blind to where their stock actually trades.
The filing explicitly rejects exemptions: tokenization is a settlement technology, not a new asset class that warrants lighter-touch oversight.
On settlement, Nasdaq points to DTC building blockchain infrastructure so token trades can clear on-chain while the exchange’s matching engine and data feeds remain unchanged.
If that plumbing arrives on schedule, live trading could start as early as the third quarter of next year.
The model assumes that transfer agents maintain tokenized registers the same way they maintain book-entry registers today, with the same custody standards and financial responsibility rules, just with a different database underlying them.
Where the fight actually sits: native issuance versus wrappers
The Dec. 4 agenda flags a distinction the crypto press often collapses: natively issued tokenized shares versus wrapper structures.
Native tokens mean the issuer itself places equity on-chain or directs its transfer agent to maintain a blockchain register, conveying full voting rights, dividend claims, and liquidation preferences.
Wrapper tokens, common on offshore platforms, offer only economic exposure: price goes up, investors profit, but they can’t vote the shares or sue in a derivative action.
Nasdaq’s filing uses European venues as a cautionary tale. Tokens tracking Apple and Amazon traded there at prices wildly divergent from the underlying stock, required no issuer consent, and granted holders neither voting rights nor liquidation rights.
When those tokens crashed, buyers discovered they owned synthetic derivatives, not shares.
The exchange argues that letting such products proliferate without registration would gut investor protections and create a shadow equity market that regulators can’t see.
The panel will probe how ownership rights flow through tokenized structures, not because the SEC is confused about what a share is, but because wrapping introduces intermediaries who may or may not pass through governance and economic rights.
If a token only tracks price, it can start to resemble a security-based swap, triggering different disclosure and margining rules.
The Securities Industry and Financial Markets Association (SIFMA) commentary explicitly stated that investors must retain the same legal and beneficial ownership in tokenized form, or the product morphs into something entirely different.
What probably works under current law (and what doesn’t)
The Dec. 4 agenda spans a spectrum of regulatory friction. At the low-friction end are issuers registering tokenized shares, listing them on national securities exchanges, and trading them interchangeably with traditional digital shares, as Nasdaq proposes.
Existing statutes already permit that if tokenization is treated as a settlement method rather than a product innovation.
Blockchain as record-keeping technology also fits, provided registered clearing agencies and transfer agents meet current custody and books-and-records standards.
Earlier SEC staff statements on digital asset custody frame this as compliance engineering, not boundary-pushing.
At the high-friction end, there is actual 24/7 trading of listed equities, which collides with Reg NMS assumptions about market hours and consolidated data.
Regulators float 24/7 markets in the crypto context, but applying that to tokenized Apple shares means rewriting how best execution works when New York sleeps and Tokyo trades.
Models where tokenized equities trade only on non-NMS blockchain venues, unregistered as exchanges or alternative trading systems, also clash with existing rules.
Nasdaq and SIFMA both argue that allowing equity volume to migrate to unconnected platforms would shred the National Best Bid and Offer (NBBO) and leave retail investors with stale quotes.
Senate work on the Responsible Financial Innovation Act points in the opposite direction, explicitly classifying tokenized stocks and bonds as securities and cementing SEC oversight.
That suggests any attempt to treat tokenized shares as outside the agency’s remit will hit legislative headwinds, not tailwinds.
What Dec. 4 decides and defers
The Investor Advisory Committee can submit findings and recommendations, but it does not write rules.
The panel is a stress test to see if Coinbase, Citadel, and Nasdaq can agree on what compliant tokenization looks like when they’re forced to reconcile custody models, interoperability standards, and short-selling mechanics in the same room.
If they can, the SEC gains a reference architecture for evaluating filings like Nasdaq’s. If they can’t, the agency learns where the technical or incentive mismatches sit before approving anything.
What the panel won’t do is approve Nasdaq’s proposal, rewrite the definition of a security, or bless offshore stock tokens that skip issuer consent.
It also won’t resolve whether 24/7 trading or cross-chain interoperability requires new exemptive relief, as those questions depend on engineering details the advisory body isn’t equipped to answer.
At most, Dec. 4 yields a menu of options the Commission can reference when deciding whether tokenized equities belong in the national market system or require a parallel structure that current law doesn’t yet contemplate.
The meeting matters because it forces the question into the open. The answer still depends on whether the market wants to retrofit blockchain into existing rails or build new ones, and the SEC has to authorize it from scratch.
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