Can on-chain stocks gain SEC approval? Next week's meeting will decide how this trillion-dollar market could transform traditional finance.

Within the existing regulatory framework, how can tokenized stocks and Apple stocks be held to the same standards?

Written by: Blockchain Knight

On December 4, the SEC Investor Advisory Committee held a special meeting, publicly discussing for the first time the long-avoided question of "how publicly traded stocks on the blockchain should operate."

Architects from institutions such as Nasdaq, BlackRock, and Coinbase gathered to discuss the issuance, trading, and settlement rules for equity tokenization, with a core focus on "how to ensure that tokenized stocks and Apple stocks follow the same standards within the existing regulatory framework."

The timing of the meeting highlights regulatory pressure. Nasdaq has already submitted a formal proposal to trade tokenized versions of listed stocks alongside traditional stocks on the same order book, advocating that blockchain settlement does not need to depart from the national market system.

SEC commissioners have previously made their stance clear: tokenization does not change the nature of the asset, and tokenized securities remain fully subject to federal regulations. This meeting focused on the implementation details of this framework, such as ownership control, NBBO mechanism adaptation, and the feasibility of short selling.

Nasdaq's "internal system" solution is the most representative: tokenized stocks and traditional stocks share CUSIP codes, execution priority, and economic rights, with blockchain only replacing the back-end ledger while front-end regulatory rules remain unchanged. Issuers still register under the Securities Act, exchanges operate under the Exchange Act, DTC is responsible for settlement assurance, and trades still contribute to the National Best Bid and Offer (NBBO).

DTC is currently building blockchain infrastructure, and if progress goes smoothly, real-time trading may start in the third quarter of next year. Under this model, transfer agents maintain the blockchain register according to existing standards, with only the underlying database being different.

The meeting aimed to clarify key distinctions that are often overlooked: native issuance versus wrapped issuance. Native tokenized shares are issued on-chain by the issuer, granting holders full voting and dividend rights; whereas wrapped tokens, common on offshore platforms, only provide economic exposure without core shareholder rights.

Nasdaq used the European market as an example to warn of risks: tokens tracking Apple have shown severe price divergence from the underlying stock, and after a crash, investors discovered they were holding synthetic derivatives.

SIFMA emphasized that tokenization must retain full legal and beneficial ownership, otherwise it becomes a fundamentally different product.

Regulatory friction is clearly layered. The low-friction scenario is the model proposed by Nasdaq, where issuers register tokenized stocks and list them, allowing interchangeability with traditional stocks. Existing regulations already allow this to be seen as a settlement technology innovation. High-friction scenarios include 24/7 trading and trading on non-NMS blockchain venues (which disrupt the NBBO mechanism), among others.

The Senate's "Responsible Financial Innovation Act" has already explicitly classified tokenized stocks and bonds as securities, consolidating SEC regulatory authority, and attempts to circumvent regulation will face legislative resistance.

This meeting was not about making rules, but about providing an evaluation framework for the SEC. The core debate remains whether blockchain should be integrated into the existing system or a new system should be built. It marks the transition of equity tokenization from industry discussion to regulatory argumentation, and the ultimate direction will depend on the balance between technological innovation and existing rules.