Nasdaq president Tal Cohen told attendees at a recent industry gathering that the Securities and Exchange Commission's evolving posture toward digital assets has opened a window for market participants to "build" again—a sentiment echoing across trading desks and compliance departments that spent the better part of two years navigating enforcement actions and regulatory ambiguity. The shift, though incremental and still unfolding, marks a departure from the agency's aggressive 2022–2023 enforcement campaign and has reignited interest in tokenization projects and the infrastructure required to support them.
The SEC's friendlier stance on crypto is revitalizing tokenization and digital market infrastructure, creating new opportunities for experimentation and growth in the industry.
The SEC's New Crypto Stance: A Catalyst for Growth#
The commission's recalibration became visible in early 2024, following leadership changes and a series of court setbacks that narrowed the scope of what constitutes an unregistered securities offering. While Chair Gary Gensler maintained that most crypto tokens fall under securities law, the agency has shown greater willingness to engage with industry participants on registration pathways and no-action relief. This shift has been particularly pronounced in the treatment of tokenized real-world assets and blockchain-based settlement systems, where the SEC has reportedly held constructive discussions with applicants rather than issuing Wells notices.
Cohen's remarks at the Digital Asset Summit in March underscored the practical impact of this regulatory thaw. Nasdaq, which operates both traditional equity markets and a digital asset custody business, had shelved several tokenization pilots during the enforcement-heavy period. The exchange is now revisiting those projects, according to people familiar with the matter. The change in tone has been equally significant: where SEC staff once greeted innovation proposals with skepticism, they now appear more open to sandbox-style arrangements that allow controlled experimentation.
The regulatory breathing room has emboldened other market infrastructure providers. Depository Trust & Clearing Corporation, the post-trade utility that settles roughly $2.5 trillion in securities transactions daily, announced in February that it would accelerate work on a blockchain-based settlement platform for tokenized securities. DTCC had paused the initiative in 2023 amid regulatory uncertainty.
Tokenization and Digital Market Infrastructure: The Building Blocks of the Crypto Ecosystem#
Tokenization—the process of representing ownership rights to an asset as a digital token on a blockchain—has long been positioned as a transformative technology for capital markets. The premise is straightforward: by encoding assets ranging from Treasury bonds to commercial real estate as programmable tokens, issuers can reduce settlement times, lower transaction costs, and enable fractional ownership at scale. BlackRock's BUIDL fund, launched in March 2024, exemplifies the model. The tokenized money market fund settled $500 million in assets within its first six weeks, demonstrating institutional appetite for blockchain-native products when regulatory clarity exists.
Digital market infrastructure encompasses the rails required to support tokenized assets: custody solutions that meet institutional standards, order-matching engines capable of handling 24/7 trading, and interoperability protocols that allow tokens to move across different blockchain networks. Traditional finance has spent decades building analogous infrastructure—central securities depositories, clearinghouses, payment systems—but much of that architecture relies on batch processing and intermediated settlement. Blockchain technology promises atomic settlement and programmable compliance, collapsing multi-day clearing cycles into minutes.
The infrastructure gap remains substantial. Most tokenization projects today operate on permissioned blockchains with limited interoperability, creating fragmented liquidity pools. Custody standards vary widely, and the legal framework for tokenized securities is still evolving. The SEC's willingness to engage on these questions—through concept releases, roundtables, and staff guidance—has accelerated development timelines. Franklin Templeton, which launched an on-chain money market fund in 2021, reported in April that it is now exploring tokenized versions of its municipal bond funds, a product category it had deemed too complex under the previous regulatory environment.
The infrastructure layer has attracted significant capital. Fireblocks, a custody and settlement platform for digital assets, raised $550 million in a Series E round in January at a $4 billion valuation. Figure Technologies, which operates a blockchain-based loan origination and servicing platform, securitized $3.2 billion in home equity loans during the first quarter, up from $1.8 billion in the same period last year. Both companies cited improved regulatory visibility as a factor in their growth.
Experimentation and Innovation in the New Environment#
The regulatory détente has unlocked experimentation across asset classes. Real estate tokenization platforms, which struggled to gain traction amid SEC scrutiny of their token offerings, have seen renewed interest. RealT, a platform that tokenizes rental properties, reported a 40% increase in property listings during the first quarter of 2024 compared to the prior year. Each property is divided into tokens representing fractional ownership, with rental income distributed proportionally to token holders. The platform now operates under a Regulation D framework, limiting sales to accredited investors—a structure the SEC has indicated it views as compliant.
Art and collectibles represent another frontier. Masterworks, which tokenizes shares in blue-chip artwork, filed for SEC registration as an investment company in February, a move that would have been unthinkable during the enforcement-heavy period. The registration process, while burdensome, provides a clear pathway to offering tokenized art shares to retail investors. The company has tokenized 18 works valued at a combined $120 million since its founding, but expects to accelerate acquisitions if its registration is approved.
Exchanges are retooling their infrastructure to support these assets. Cboe Digital, the crypto arm of Cboe Global Markets, announced in March that it would launch a spot trading venue for tokenized securities, pending regulatory approval. The platform would allow 24/7 trading of tokens representing shares in private companies, real estate, and other alternative assets. Cboe has been in discussions with the SEC on market structure questions, including how to handle settlement finality and investor protections in a blockchain environment.
Nasdaq has taken a different approach, focusing on the technology layer. The exchange operator licenses its matching engine and surveillance technology to digital asset platforms, and has been working with the SEC on standards for market manipulation detection in tokenized markets. Cohen noted that the regulatory dialogue has shifted from "whether" these markets should exist to "how" they should be structured—a subtle but meaningful change.
Mitigating Risks and Challenges in the New Environment#
Regulatory uncertainty persists despite the improved tone. The SEC has not issued comprehensive guidance on tokenized securities, and much of the current framework relies on staff-level interpretations and no-action letters that could be reversed. The agency's approach to decentralized finance protocols remains unclear, and several enforcement actions against DeFi platforms are still pending. Market participants are proceeding cautiously, often over-engineering compliance systems to account for potential regulatory shifts.
Security concerns loom large as tokenization scales. Smart contract vulnerabilities have resulted in billions of dollars in losses across DeFi protocols, and tokenized securities platforms face similar risks. Custodians must balance the security benefits of cold storage with the operational demands of 24/7 settlement. Multi-signature wallets, hardware security modules, and insurance products have become standard, but the infrastructure is still maturing. The SEC has signaled that it will hold platforms accountable for custody failures, even when the underlying technology is at fault.
Scalability presents another challenge. Most tokenization platforms operate on Ethereum or Ethereum-compatible chains, which can process roughly 15 transactions per second on the base layer. Layer-2 solutions and alternative blockchains offer higher throughput, but introduce interoperability and liquidity fragmentation issues. The industry is converging on standards—the Ethereum Request for Comment 3643 token standard for securities, for instance—but adoption remains uneven.
Market structure questions are equally pressing. How should tokenized markets handle circuit breakers, trading halts, and other investor protections that exist in traditional securities markets? What disclosure obligations apply to issuers of tokenized assets? The SEC's Division of Trading and Markets has been working with industry groups on these questions, but definitive answers remain elusive. The risk is that platforms move forward with incompatible approaches, creating a patchwork of standards that undermines the efficiency gains tokenization promises.
The regulatory thaw has created momentum, but the path forward requires continued engagement between the SEC and market participants. Tokenization's promise—frictionless, 24/7 markets with atomic settlement—depends on infrastructure that meets institutional standards and regulatory frameworks that provide clarity without stifling innovation. Cohen's observation that markets can "build" again reflects cautious optimism, tempered by the understanding that the foundation is still being poured.