KEY TAKEAWAYS
- The NYSE is developing a blockchain-based platform for 24/7 trading of tokenized U.S. equities and ETFs, aiming to modernize traditional market structures.
- Intercontinental Exchange seeks regulatory approval to launch the platform, which promises instant trade settlement using blockchain technology.
- The initiative includes stablecoin integration, with support from major institutions like Bank of New York Mellon and Citigroup.
- Regulatory challenges persist, but successful implementation could set a precedent for integrating blockchain in traditional finance.
The New York Stock Exchange (NYSE) is developing a blockchain-based trading platform that could enable 24/7 trading of tokenized U.S. equities and exchange-traded funds (ETFs). This initiative, revealed earlier this week, signifies a potential departure from traditional market structures characterized by limited trading hours and delayed settlement processes.
Intercontinental Exchange (ICE), the parent company of the NYSE, is currently seeking regulatory approval to launch the platform later this year. If approved, the platform would operate alongside the NYSE as a separate venue, allowing investors to trade tokenized versions of real stocks. The key innovation lies in the platform’s ability to settle trades instantly using blockchain technology, replacing the next-day settlement process that often ties up capital and introduces risk.
Stablecoin Integration and Institutional Support
The proposed system also envisions the use of stablecoin-based funding, utilizing dollar-pegged digital tokens such as USDC. This would enable trades and funding to occur outside standard banking hours. ICE is collaborating with major institutions, including Bank of New York Mellon and Citigroup, to support tokenized deposits across its global clearinghouses.
Sergej Kunz, co-founder of 1inch, commented on the development, stating, “24/7 trading removes another hurdle to RWA adoption by creating the opportunity for continuous liquidity.” However, he noted that liquidity must still be present during these hours, and issues such as cross-venue and cross-chain fragmentation need to be addressed to ensure reliable liquidity.
Regulatory Challenges and Market Implications
Wall Street’s interest in tokenization is not isolated. Platforms like Kraken and Robinhood have already ventured into 24/7 tokenized stock trading, offering fractional access to equities beyond regular market hours. This trend aligns with a broader movement towards using blockchain to shorten settlement times and expand global access to U.S. equities.
Tokenization represents more than just a technical advancement; it is a strategic shift. By converting shares into digital tokens on a blockchain, markets can lower barriers, enhance transparency, and reduce operational friction. This facilitates participation from a wider range of investors worldwide.
Despite these advancements, regulatory hurdles remain. The platform still requires approval, and U.S. authorities have been cautious about integrating decentralized technology into regulated securities markets. If successful, this project could set a precedent for traditional finance adopting on-chain infrastructure, marking a significant milestone in the mainstreaming of digital assets.
For more insights, the original announcement can be found here.
Why This Matters: Impact, Industry Trends & Expert Insights
The New York Stock Exchange (NYSE) is developing a blockchain-based platform for 24/7 trading of tokenized U.S. equities and ETFs, potentially transforming traditional market structures.
According to a Coinbase report, the acceleration of tokenized equities adoption by retail exchanges and traditional institutions is driven by regulatory clarity and the convergence of traditional finance (TradFi) and decentralized finance (DeFi). This aligns with the NYSE’s initiative to use blockchain for continuous trading and instant settlement, expanding global access to U.S. equities.
A report from Investing.com highlights that the NYSE’s blockchain platform could significantly reshape traditional markets by enabling 24/7 trading, instant settlement, and fractional ownership. This supports the potential impact of the NYSE’s platform in democratizing access to high-priced securities and accelerating market reactions to global events.
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