Dissecting the two major hotspots of US stock tokenization by the end of 2025: which are real progress, and which are misinterpretations?

Author: Yuan Biao

In December 2025, discussions around “U.S. stock tokenization” in the financial markets surged.

This was mainly due to two events: first, Nasdaq applied to extend trading hours, prompting speculation that “the era of 24/7 stock tokenized trading is coming”; second, the U.S. Securities and Exchange Commission (SEC) issued a “No Action Letter” to the Depository Trust & Clearing Corporation (DTC), which further focused global financial attention.

However, behind the excitement, the actual connection between these two events and “U.S. stock tokenization” is vastly different from appearances. We need to look beyond the surface to clarify the true development trajectory of the industry.

Nasdaq Extends Trading Hours: Traditional Securities’ “Time Optimization” Has No Direct Relation to Tokenization

On December 15, Nasdaq submitted Form 19b-4 to the SEC, proposing to extend trading hours for U.S. stocks and exchange-traded products.

In simple terms, they want to change the trading model to “5 days a week, nearly 23 hours a day.” The specific plan is: from 4:00 to 20:00 Eastern Time is the main trading session, with an additional night session from 21:00 to the next day’s 4:00, and a pause from 20:00 to 21:00 for order clearing.

This announcement quickly sparked associations within the Web3 community, with many opinions suggesting it was “laying the groundwork for U.S. stock tokenization, enabling stocks to trade 24/7 like digital currencies.”

However, when examining the details of the application, this interpretation appears more wishful thinking—this adjustment has no direct relation to “tokenization.” Essentially, it is merely an “efficiency upgrade” of traditional securities trading systems.

The main reasons are:

1. Content-wise, the entire application makes no mention of “tokenization” or “blockchain.” All rule designs revolve around traditional stocks, ETFs, and similar assets, with a very practical core goal—extending trading hours to meet the needs of institutional investors across different time zones, rather than adapting to the trading characteristics of digital assets.

2. Functionally, the newly opened night trading session is not a “full” market. Many complex order rules (such as algorithmic trading and special clearing terms for block trades) are not applicable during this period, and some risk control features are limited. Therefore, the night session is essentially a “time extension” of the traditional trading system, not a step toward transforming into a “24/7, full-featured” digital asset market.

SEC’s No Action Letter to DTC: A “Compliance Trial” for U.S. Stock Tokenization, Not a Full Approval

What is directly related to U.S. stock tokenization is the SEC’s issuance of a “No Action Letter” to DTC (the core depository, clearing, and settlement institution for the U.S. stock market, a subsidiary of DTCC) on December 11. It is important to clarify that this letter does not represent a comprehensive approval of tokenization technology but is a regulatory adjustment allowing for “case-by-case” handling.

Why does DTC need this “approval”?

Because under current regulations, self-regulatory organizations like DTC must submit applications to the SEC and undergo lengthy approval processes—sometimes up to 240 days—when changing business rules or making major arrangements. To promote tokenization pilots, DTC applied for “exemptions from certain procedural obligations during the pilot period.” This SEC letter essentially grants DTC a temporary “compliance trial window,” allowing it to avoid enforcement actions against its tokenization pilot under certain conditions.

How is this pilot designed?

Its core idea is very cautious: it aims solely at “efficiency upgrades” without touching the core of financial infrastructure. This aligns with China’s emphasis on “technological exploration first, core system unchanged” in blockchain applications, with three key points:

1. Tokens are merely “ownership records” and do not represent “stock rights.” The pilot does not replace DTC’s existing stock ledger system with blockchain. Instead, it provides brokerages with an “additional option”—allowing them to generate a “digital token” on the blockchain for some of their holdings. This token is only a record of ownership; it is not a stock, does not confer voting or dividend rights, and cannot be used directly to buy or sell stocks. The actual stocks remain in DTC’s legacy system.

2. All transaction flows are monitored throughout. Even if these tokens can be transferred peer-to-peer between approved wallets, each transaction is monitored in real-time by DTC’s off-chain monitoring system (LedgerScan) to ensure full traceability.

3. Triple compliance constraints:

To mitigate risks like money laundering and asset disconnection common in tokenization, this pilot sets strict restrictions:

• Scope constraint: Tokens can only be transferred between wallets approved by DTC, prohibiting circulation to unverified third parties or individuals under KYC/AML compliance.

• Authority constraint: DTC retains the authority to “force transfer or destroy tokens” to address abnormal transactions or asset disconnection risks.

• System constraint: The entire tokenization system is fully isolated from DTC’s core clearing system to prevent technical or operational risks from propagating into traditional finance, maintaining financial stability.

The Future of U.S. Stock Tokenization: Gradual Upgrades and Cross-Market Collaboration

What does the future hold for U.S. stock tokenization?

Overall, it will not be a “sudden revolution” but more like a “quiet infrastructure upgrade,” similar to China’s gradual approach during reform and opening-up—“crossing the river by feeling the stones.”

In the short term, DTC’s pilot may start with a few highly liquid stocks and gradually expand to more stable, standardized, and lower-risk assets like ETFs and government bonds. Participants in this phase will mainly be banks, brokerages, and other professional institutions, with retail users still unable to participate directly. Meanwhile, the SEC will use data from these pilots to formulate more detailed rules, such as clear standards for information disclosure of tokenized assets and custody responsibilities, providing clearer compliance guidance for the industry.

In the long term, the ultimate value of U.S. stock tokenization may lie in achieving “cross-market collaboration”—for example, connecting settlement systems of U.S., Hong Kong, and crypto markets to enable “one-click global asset allocation.” However, realizing this goal still faces two major obstacles:

1. Differences in global regulatory frameworks: Significant variations exist among the EU’s MiCA regulations, Hong Kong’s virtual asset policies, and U.S. state-level regulations. Developing a coordinated regulatory framework remains a challenge.

2. Security and compatibility of cross-chain technology: The technical standards and consensus mechanisms across different blockchains vary greatly. Ensuring the safe and efficient transfer of assets across chains requires ongoing industry exploration.

In summary, these two hot topics at the end of 2025 fundamentally signal that U.S. stock tokenization is moving from “conceptual discussion” toward “regulatory pilot”—but this is only the beginning of a long journey. There is still a long way to go before “U.S. stock tokenization” can truly reshape the global capital markets.