24X National Exchange has taken a significant step towards integrating tokenized assets into traditional stock market frameworks by submitting a rule change proposal to the Securities and Exchange Commission (SEC). This proposal, identified as SR-24X-2026-20, seeks to allow the trading of tokenized versions of stocks from the Russell 1000 index and various major exchange-traded funds (ETFs) on its regulated market.
The initiative aims to amend the rules of 24X to facilitate the trading of tokenized securities as part of a pilot program involving the Depository Trust Company (DTC). Unlike other digital asset platforms that operate independently of traditional markets, this structure is designed to maintain tokenized shares within the existing U.S. equity market framework. This approach seeks to prevent the formation of separate markets specifically for stock tokens, thereby preserving the integrity of the standard trading system.
Under the proposed regulations, exchange members will have the option to indicate a preference for tokenized shares at the time of order entry. Once executed, these instructions are communicated to the DTC, while ensuring that the tokenized shares continue to trade on the same order book as their conventional counterparts. This alignment is crucial as it supports the liquidity and operational efficiencies present in the current market.
To ensure that tokenized securities can coexist with traditional stocks, they must meet several conditions. Each tokenized share would need to be fungible with the original, maintaining the same CUSIP and ticker symbol. Additionally, all shareholder rights such as dividends, voting rights, and residual claims would remain intact. Securities that fail to adhere to these stipulations would be classified as distinct products, separate from the original stock.
Initially, the focus of this tokenization effort will be on the constituents of the Russell 1000 index, along with future index additions and major benchmark ETFs. Additionally, 24X will be required to notify members a minimum of 30 calendar days prior to the commencement of tokenized trading, allowing firms ample time to adjust their processes and prepare for the new order instructions and post-trade activities.
This recent filing follows a similar rule change approved by Nasdaq earlier this year, underlining a broader shift towards accepting tokenized equities within a more clearly defined U.S. market structure. While the SEC has acknowledged the 24X rule change as effective under exchange procedures, the actual implementation of the trading framework hinges on the DTC’s successful completion of the necessary infrastructure and post-trading services required for the pilot program.
As tokenization progresses, this initiative represents a critical step in showing how regulated exchanges might harness blockchain technology beyond private investments and treasury products. A key challenge remains: effectively integrating public equities into blockchain-based settlement systems without disrupting the essential liquidity, surveillance, and investor protection frameworks that are foundational to U.S. stock trading.
