Wall Street's On-Chain Shift: The New York Stock Exchange and NASDAQ Compete to Lead in Securities Tokenization, transforming traditional financial markets through blockchain technology and digital assets.

In this historic transformation, the biggest winners will be those entities and individuals who can transcend traditional and crypto mindsets, and take the lead in finding optimal solutions amid the dynamic balance of regulation, innovation, and market forces.

Article by: FinTax

1. Introduction

On January 19, 2026, the New York Stock Exchange announced that it is developing a blockchain-based tokenized securities trading platform, with plans to launch after obtaining regulatory approval. Previously, in September 2025, Nasdaq submitted a proposal for rule changes related to tokenized securities, which is currently under SEC review.

As the two major Wall Street trading giants simultaneously explore blockchain, and as cryptocurrencies intersect with traditional systems, this is no longer a question of “whether” but “how.” To deeply understand the significance of this transformation, this article will first clarify the core principles of securities tokenization, compare the strategies and logical approaches of the two exchanges, and explore the impact of this trend on the crypto market and variables worth watching.

2. The Starting Point of the Transformation: What is Securities Tokenization?

Securities are legal certificates that record and represent certain rights. Securities tokenization refers to the process of converting traditional financial assets (such as stocks, bonds, fund shares, real estate, etc.) into digital tokens using blockchain technology. These tokens represent ownership, income rights, or other related rights to the underlying assets.

Securities serve to prove that their holders are entitled to the rights recorded on their certificates. The way securities are recorded has evolved several times. Initially, during the paper stock certificate era, investors held physical certificates. Later, in the electronic bookkeeping era, stocks became records in the Depository Trust Company (DTC) database. Today, the discussion of securities tokenization involves moving this record onto the blockchain, creating a digital token.

DTC is the core clearing and settlement institution of the US securities market. Nearly all stocks traded in the US are ultimately registered and settled through DTC. Its database records information such as the holder and the number of shares, serving as the “general ledger” of the US securities market. Understanding DTC’s role is crucial to grasp the differences in the approaches of the two exchanges discussed below.

After understanding the essence of securities tokenization, the next question is: given the same trend, what different answers have the two major exchanges provided?

3. Two Approaches: Comparing NYSE and Nasdaq’s Plans

3.1 NYSE: Building a New On-Chain Trading Venue

NYSE plans to establish a completely new, independent platform for tokenized securities. This platform will operate alongside the existing stock trading system but will use blockchain technology for post-trade clearing and settlement.

The core features of this platform can be summarized in four aspects:

• First, 24/7 trading. The current US stock market is only open during specific hours on weekdays (9:30 AM to 4:00 PM New York time), whereas the new platform aims to support round-the-clock, seven-day trading.
• Second, real-time settlement. The existing stock market uses a T+1 settlement system, meaning trades executed today are only fully settled the next business day. The new platform plans to achieve instant settlement after trade completion, enabling faster capital turnover and reducing counterparty risk.
• Third, stablecoin financing. The platform will support settlement using stablecoins (a type of digital currency pegged to the US dollar with relatively stable value), allowing investors to transfer and settle funds outside traditional banking hours.
• Fourth, fractional share trading. The platform will allow investors to buy stock shares by dollar amount rather than whole shares—for example, purchasing only $50 worth of Apple stock instead of a full share.

NYSE explicitly states that holders of tokenized stocks will enjoy the same rights as traditional shareholders, including dividends and voting rights. In other words, this is not a synthetic asset or derivative but a true transfer of securities rights onto the blockchain.

3.2 Nasdaq: Adding Tokenization Options within the Existing System

Nasdaq’s approach is quite different. Instead of building a new trading venue, Nasdaq plans to add an option for tokenized settlement within its existing trading system.

Matt Savarese, head of Nasdaq Digital Assets, explained in an interview: “Investors can choose to hold stocks in a tokenized form on the blockchain or continue using traditional accounts. The essence of the stock remains unchanged—the trading code and the security’s unique identifier (CUSIP) are exactly the same. Tokenization is fully interchangeable and equivalent to the traditional form.”

Specifically, when investors buy or sell stocks on Nasdaq, the process is identical to today—same order book, same prices, same trading rules. The only difference is in the settlement process after the trade: investors can choose to settle in the traditional way or opt for tokenized settlement. If they choose the latter, the Depository Trust Company (DTC) will register the corresponding stocks as tokens on the blockchain.

Nasdaq’s tokenization feature will become operational once the relevant DTC infrastructure and necessary regulatory approvals are in place, with an expected earliest launch in late Q3 2026.

3.3 Differences Between the Two Approaches

A simple analogy can help understand the difference: Nasdaq’s approach is like adding a digital bookkeeping option at the existing bank counter—customers still go to the same counter, conduct transactions in the same way, but choose to record their certificates on the blockchain; NYSE’s approach is like opening a new 24-hour digital bank next to the existing bank branch—this new bank uses a completely new technology system and can offer services that traditional branches cannot.

Furthermore, the main differences between the two plans lie in the trading layer and the settlement layer:

• Trading Layer: NYSE builds a new independent platform, Nasdaq integrates into the existing system

NYSE adopts a “parallel market” model, where tokenized securities are traded on a separate new venue. The same stock may be quoted simultaneously on the traditional main board and the tokenized platform.

Nasdaq adopts a “unified market” model, where tokenized stocks and traditional stocks share the same order book and price discovery mechanism. This ensures market liquidity is not fragmented and that trading experience remains unchanged for investors.

• Settlement Layer: NYSE aims for real-time (T+0) settlement, Nasdaq maintains T+1

This is the fundamental difference between the two approaches.

Nasdaq relies entirely on DTC’s existing tokenization services, using traditional funds. After trade completion, Nasdaq sends settlement instructions to DTC—blockchain merely adds a layer of digital record on top of the existing registration system, without replacing it. This architecture offers clear compliance pathways and manageable systemic risk but cannot break the current settlement cycle limit—Nasdaq has explicitly stated that initial tokenized securities will still settle on T+1.

NYSE plans to achieve instant settlement (T+0) and support stablecoin settlement, fundamentally breaking the constraints of trading hours. Traditional markets require T+1 or longer settlement cycles because of time-consuming processes like fund transfers, securities transfer, and clearing. This significantly impacts capital efficiency; according to SIFMA data, reducing the US market from T+2 to T+1 decreased the NSCC clearing fund size by about 29% (roughly $3.7 billion). Instant settlement can bring substantial efficiency gains.

4. Strategic Divergence: Why Do the Two Major Exchanges Choose Different Paths?

NYSE and Nasdaq have chosen very different routes for securities tokenization. This divergence reflects their differing assessments of risks, opportunities, and market competition. Analyzing these strategic logics helps us understand the core considerations of traditional financial institutions applying blockchain technology.

4.1 Balancing Innovation and Risk Isolation

Nasdaq’s choice to integrate into the existing system offers advantages such as rapid deployment, minimal market disruption, and low initial investment. However, this limits innovation, making it difficult to provide features like 24/7 trading and instant settlement. Essentially, Nasdaq views tokenization as an incremental feature—it believes most institutional investors will not abandon familiar trading processes in the short term. The value of tokenization lies in offering an optional alternative, not in disrupting the current system.

NYSE’s decision to build an independent platform prioritizes risk isolation. Running the new platform separately from the existing system means that even if technical issues or regulatory disputes arise, the main NYSE market remains unaffected. Additionally, an independent platform can be designed from the ground up to support new features like 24/7 trading and instant settlement, which are hard to implement within the current architecture. More deeply, NYSE’s move is positioning itself for the next-generation market infrastructure—once real-time settlement becomes industry standard, early movers will have significant technological and user advantages.

4.2 Compliance Strategies: Navigating Within and Beyond Regulatory Frameworks

Both exchanges place compliance at their core but adopt different approaches.

Nasdaq’s plan aims to operate within the existing regulatory framework. Matt Savarese emphasized: “We are not overturning the current financial system but gradually advancing tokenization under SEC regulation.” Nasdaq maximizes the reuse of existing compliance structures, minimizing regulatory uncertainty.

NYSE, on the other hand, is taking a more ambitious route. Building a new trading venue, introducing stablecoin settlement, and enabling 24/7 trading all involve potential new regulatory issues. However, NYSE believes that the current regulatory window is a rare opportunity—rather than waiting for rules to become fully clear and passively following, it prefers to actively shape the rules. This collaborative approach to regulation could provide a first-mover advantage if the regulatory environment becomes more friendly.

4.3 Ecosystem Positioning: Hub Platform vs. Value-Added Service Provider

Nasdaq’s positioning is more focused on providing value-added services to existing clients. Its plan essentially adds a technological option on top of current operations, allowing investors to choose tokenized holdings. This strategy benefits from low client migration costs and minimal adoption resistance but also means Nasdaq’s role in this transformation is more of a “follower” than a “pioneer.”

NYSE’s strategy indicates a stronger intent to build an ecosystem. Its platform plans to offer non-discriminatory access to all qualified broker-dealers, aiming to become a hub connecting traditional financial networks with the digital asset world and activating the distribution capacity of the entire traditional financial system. If successful, NYSE could evolve from a single trading venue into a foundational infrastructure provider spanning both traditional and on-chain worlds—a business model with greater potential.

Neither approach is inherently superior; success depends largely on external factors—especially the pace of regulatory evolution. This raises the next key question: what changes are occurring in US regulation, and how might these influence the implementation prospects of both approaches?

5. From Resistance to Drive: Changes in the US Regulatory Environment

The active deployment of securities tokenization by the two major exchanges is closely linked to fundamental shifts in the US regulatory environment. It is the improvement in regulatory expectations that has opened a window for traditional financial institutions to embrace blockchain.

5.1 Paradigm Shift in Regulation: From “Enforcement-Led” to “Rule-Led”

In recent years, the SEC’s regulation of crypto assets has left the industry with the impression that “enforcement” rather than “rules” dominates—cases are numerous, boundaries are fuzzy, and expectations are uncertain, leading to a tug-of-war between innovation and compliance. However, after 2025, the SEC’s narrative has shifted noticeably. It has begun to more openly discuss “how to bring capital markets on-chain” and is exploring compliant pathways for tokenized securities, on-chain trading, and clearing through exemptions, pilot programs, and classification-based regulation. This change stems from three realizations: the consensus on blockchain’s settlement efficiency advantages; urgent institutional demand for real-time settlement and 24/7 trading; and the crypto industry’s growing economic and political influence.

5.2 Legislative Breakthroughs: GENIUS Act and Stablecoin Regulation

In July 2025, the “GENIUS Act” was signed into law, marking the first federal legislation in the US targeting stablecoins. The law establishes a comprehensive regulatory framework for payment stablecoins, requiring issuers to hold full reserves of USD or other low-risk assets on a one-to-one basis, and to disclose reserve composition monthly, with certification by the CEO and CFO.

Stablecoins are a key infrastructure for real-time settlement in the tokenized securities ecosystem. NYSE explicitly includes stablecoin financing as a core feature of its new platform. The passage of the “GENIUS Act” provides legal certainty for stablecoins, removing major barriers for traditional financial institutions to participate in this space. This explains why NYSE dares to incorporate stablecoin settlement into its plan—the legal uncertainties have been largely resolved.

5.3 Policy Coordination: Administrative and Regulatory Synergy

On January 23, 2025, President Trump signed an executive order titled “Strengthening America’s Leadership in Digital Financial Technologies,” explicitly supporting responsible growth of digital assets and blockchain across the economy, and establishing the President’s Digital Asset Market Working Group. In regulatory enforcement, in January 2025, the SEC established a dedicated cryptocurrency task force focusing on issuance, trading, custody, and other aspects of digital assets. From legislation to administration and enforcement, the US government’s attitude toward digital assets has shifted from cautious observation to active guidance. This policy synergy provides an essential institutional foundation for NYSE and Nasdaq’s tokenization strategies.

A clearer regulatory environment will not only influence the implementation of both approaches but also profoundly reshape the entire crypto market landscape. How will this trend change capital flows, infrastructure, and compliance boundaries in the crypto space?

6. Market Impact and Future Outlook

6.1 Capital Flows: New Channels for Institutional Entry

With clearer regulatory expectations, market participants are shifting from defensive to proactive strategies, blurring the lines between DeFi and CeFi. For institutional investors, the NYSE and Nasdaq tokenization plans offer compliant, trustworthy entry channels. A securities token trading platform with the NYSE’s brand, operating fully within the regulatory framework, will be highly attractive to compliant institutional capital. This could accelerate the inflow of previously hesitant funds due to compliance concerns into tokenized assets. Existing crypto trading platforms may face short-term pressure, but in the long run, NYSE’s move effectively enhances the credibility of the entire asset tokenization sector, speeding up regulatory clarity and market maturity.

6.2 Infrastructure: Paradigm Shift in Settlement and Trading Mechanisms

Real-time settlement will reshape margin calculation models and significantly reduce counterparty risk. The geographic and temporal arbitrage space will shrink, and 24/7 trading will alter global market interconnectivity. Additionally, on-chain liquidity aggregation could create new market depth, with potential emergence of specialized market maker pools, AMMs, and hybrid order book models.

6.3 Compliance Boundaries: From “Gray Areas” to “Clear Rules”

Entry of traditional financial institutions will push the entire industry toward higher compliance standards. As regulated entities, NYSE and Nasdaq’s tokenization plans must conform to existing securities laws, setting industry compliance benchmarks. Meanwhile, regulators are actively developing specific rules for tokenized securities, gradually narrowing the industry’s “gray areas.”

6.4 Risks and Challenges

Technologically, seamlessly integrating mature traditional trading systems with blockchain technology is a complex engineering challenge. Issues such as blockchain network transaction capacity, interoperability between different chains, and smart contract security must be addressed. Risks include immature cross-chain security tech and potential new on-chain market manipulation.

Despite regulatory improvements, fragmentation risks remain. The jurisdictional boundaries between SEC and CFTC are still being clarified, and cross-jurisdictional rule recognition is pending.

Market habits also pose challenges—changing decades-old financial market inertia takes time. Legal, compliance, and risk management teams of institutions need time to evaluate and trust this new model. The 24/7 market operation may also increase volatility, demanding higher risk management capabilities from investors.

6.5 Key Variables for Investors to Watch

• Short-term (1-2 years): Progress of regulatory approvals. Nasdaq’s plan is expected to launch as early as late Q3 2026, while NYSE has not announced specific timelines, only stating it will launch after regulatory approval. DTC’s tokenization pilot is scheduled for late 2026.
• Medium-term (3-5 years): Evolution of market structure. The scale of tokenized assets is expected to grow significantly, and market maker roles will undergo fundamental changes. Competition in compliance technology will focus on programmable compliance protocols, cross-jurisdiction mutual recognition, and privacy computing.
• Long-term (beyond 5 years): Paradigm shift in regulation. Focus may shift from “institutional regulation” to “protocol regulation,” with code-based compliance becoming standard. Governance models may innovate, including tokenized proxy voting and real-time governance mechanisms.

7. Conclusion

In 1792, the NYSE was founded under a sycamore tree on Wall Street. Over two centuries later, it is beginning to move from physical to on-chain. As Nasdaq stated in its proposal, the US stock market has experienced a transition from paper certificates to electronic bookkeeping, and tokenization can be seen as the latest chapter in this evolution. In this historic transformation, the biggest winners will be those entities and individuals who can transcend traditional and crypto mindsets, and take the lead in finding optimal solutions amid the dynamic balance of regulation, innovation, and market forces.