Can on-chain stocks gain SEC approval?

On December 4th, the SEC Investor Advisory Committee held a special meeting to publicly discuss for the first time the long-avoided question of "how publicly traded stocks on the blockchain should operate." Architects from Nasdaq, BlackRock, Coinbase, and other institutions gathered to discuss the rules for the issuance, trading, and settlement of equity tokenization, with a core focus on "how to ensure that tokenized stocks and Apple stock follow the same standards within the existing regulatory framework." The timing of the meeting highlights regulatory pressure. Nasdaq has submitted a formal proposal to trade tokenized versions of its listed stocks alongside traditional stocks on the same trading book, arguing that blockchain settlement should not be separated from the national market system. SEC commissioners have previously clarified their position: tokenization does not change the nature of assets, and tokenized securities remain fully subject to federal regulations. This meeting focused on the implementation details of this framework, such as control ownership, compatibility with the NBBO mechanism, and the feasibility of short selling. The Nasdaq "system-internal" approach is the most representative. Tokenized shares share CUSIP codes, execution priorities, and economic rights with traditional shares. The blockchain only replaces the backend ledger, while frontend regulatory rules remain unchanged. Issuers are still registered under the Securities Act, exchanges operate under the Exchange Act, DTC is responsible for settlement guarantees, and trading still contributes to the National Best Bid-Bet (NBBO). DTC is currently building its blockchain infrastructure, and if progress is smooth, real-time trading may launch in the third quarter of next year. Under this model, transfer agents maintain the blockchain register according to existing standards; only the underlying database differs. The meeting will focus on clarifying a key, often overlooked, difference: native tokenization versus encapsulated tokenization. Natively tokenized shares have the issuer putting the equity on the blockchain, and holders enjoy full voting rights and dividend rights; while encapsulated tokens commonly found on offshore platforms only provide economic exposure and lack core shareholder rights. Nasdaq used the European market as an example to warn of risks, noting that tokens tracking Apple were severely decoupled from the underlying stock price, and investors only realized they were holding synthetic derivatives after the crash. SIFMA emphasizes that tokenization must retain full legal and beneficial ownership; otherwise, it becomes a completely different product. Regulatory friction is clearly stratified. Low-friction scenarios include the model proposed by Nasdaq, where issuers register and list tokenized stocks, which are then swapped with traditional stocks; current regulations allow this to be considered a settlement technology innovation. High-friction scenarios include 24/7 trading and trading on non-NMS blockchain venues (which undermines the NBBO mechanism). The Senate's Responsible Financial Innovation Act has explicitly classified tokenized stocks and bonds as securities, consolidating the SEC's regulatory power; attempts to circumvent regulation will face legislative resistance. This meeting was not about rule-making, but rather about providing the SEC with an assessment framework. The core disagreement remained on whether to integrate blockchain into the existing system or build a new one. It marks the transition of equity tokenization from industry discussion to regulatory review, and the ultimate direction will depend on the balance between technological innovation and existing regulations.