Nasdaq Chief Executive Adena Friedman warned that tokenized stock derivatives and trading conducted outside established market systems could obscure price discovery and fragment liquidity in US equity markets. Speaking in a recent interview with CNBC's 'Squawk Box,' Friedman said the exchange operator is prioritizing a form of tokenization that brings securities onto blockchain infrastructure while preserving direct ownership of the underlying assets.
The comments place one of the largest US exchange operators at the center of a growing debate over how traditional equities should move onto blockchain rails. Friedman drew a sharp distinction between tokenized shares that confer ownership and derivative products that do not, arguing that the latter risk pulling trading activity away from the transparent systems that underpin US capital markets.
Three Models for Tokenized Equities
Friedman outlined three distinct approaches to tokenization currently taking shape across the industry. The first involves issuing and trading tokenized shares through established market infrastructure. The second moves share trading outside that system under regulatory exemptions. The third centers on issuing stock-backed derivatives, according to Crypto Briefing.
Nasdaq is concentrating its efforts on the first model as it builds what Friedman described as an end-to-end approach to tokenized equities. The exchange views blockchain as a potential tool for improving capital flows across securities including stocks, Treasuries and money-market instruments, provided the transparency and ownership rights that underpin traditional markets are maintained.
Friedman emphasized that the form of the asset should not change its fundamental nature, saying that purchasing a company's stock amounts to the same thing whether it takes a conventional or tokenized form. She distinguished those tokenized shares from derivatives, which do not necessarily give the holder direct ownership of a company.
Concerns Over Price Discovery and Liquidity
Friedman raised concerns that stock-backed tokens and trading conducted beyond the established market systems could erode the process of price discovery, splinter liquidity and reduce the ability of companies to see how their own shares are changing hands. When activity moves away from the core market system, she said, it reduces visibility into quotes and transactions, potentially undermining the mechanisms by which prices are set and dividing liquidity across venues.
There's no visibility into the trading with quotes or trades, Friedman said of activity conducted outside the core system. She described that activity as existing beyond the market environment built over time for US investors and issuers alike.
The warning reflects a broader tension as crypto-native firms and traditional exchanges race to define how tokenized securities will trade. Friedman has framed Nasdaq's approach as an effort to keep that activity within the regulated market structure rather than allowing it to develop in parallel venues with less transparency.
Nasdaq's Tokenization Push With Payward
Nasdaq is pursuing its tokenized equities strategy through a partnership with Payward, the parent company of crypto exchange Kraken, announced in March. The two companies are developing what they call an equities transformation gateway built on the xStocks framework developed by Payward, and Nasdaq Ventures later committed $100 million in an investment in the firm.
The launch of Nasdaq Equity Tokens is planned for the second quarter of 2027. The initiative represents the exchange's most concrete step toward bringing blockchain-based settlement and trading into its core market infrastructure.
"We are very focused on driving tokenization through the core of markets," Friedman said, underscoring the exchange's preference for working within existing market structure rather than around it.
Competition in Tokenized Securities
Other platforms are moving ahead with their own tokenized securities offerings. OKXICE, the ICE-OKX joint venture, submitted a filing earlier this month seeking to list 63 tokenized US stocks on X Layer, and subsequently disclosed that nine companies whose shares were included in the proposal had raised objections.
The competing approaches highlight the unresolved questions facing regulators and market participants as tokenization gains traction, including who controls the trading venue, how ownership is recorded and whether prices formed in one system will reflect activity in another.
Friedman's Broader Message on Trust and Technology
The CNBC interview came days after Friedman, who was honored as number four on the 2026 Most Powerful Women in Finance list, delivered a keynote address at the American Banker Most Powerful Women in Banking and Finance Conference in New York City on Tuesday, October 20, 2026. In those remarks, she traced the arc of technological change in financial markets from Nasdaq's founding in 1971 as the world's first electronic stock market to the current era, in which artificial intelligence, digital payments, tokenization and shifting geopolitics are reshaping the financial system.
Friedman argued that breakthrough technologies fulfill their potential only when people trust them enough to change how they work. She issued a call to action for the United States to develop a National Fraud Strategy that would bring together financial institutions, law enforcement, technology companies and other stakeholders to combat financial crime through collaboration.
Conclusion
Friedman's remarks establish Nasdaq's position that tokenized equities should trade within established market infrastructure, preserving direct ownership and transparent price discovery rather than migrating to derivative products or exempt venues. The exchange is backing that stance with its Payward partnership and a planned launch of Nasdaq Equity Tokens in the second quarter of 2027. Whether regulators and issuers align with that model, or rival approaches such as OKXICE's proposed listings gain ground, will shape how US equities move onto blockchain rails.
Frequently Asked Questions
What did Nasdaq CEO Adena Friedman say about tokenized stock derivatives?
Friedman warned that stock-backed derivatives and trading outside established market systems could weaken price discovery, fragment liquidity and limit companies' visibility into trading in their own shares. She said such activity sits outside the market environment created for US investors and issuers.
What are the three approaches to tokenization Friedman identified?
Friedman identified issuing and trading tokenized shares through established market infrastructure, moving share trading outside that system under regulatory exemptions, and issuing stock-backed derivatives. Nasdaq is focused on the first model as it develops an end-to-end approach to tokenized equities.
When will Nasdaq Equity Tokens launch?
Nasdaq Equity Tokens are scheduled to launch in the second quarter of 2027. The product is being developed through a partnership with Payward, Kraken's parent company, announced in March, using an equities transformation gateway based on Payward's xStocks framework.
What is Nasdaq's partnership with Payward?
Nasdaq and Payward, the parent of crypto exchange Kraken, announced a partnership in March to develop an equities transformation gateway built on Payward's xStocks framework. Nasdaq Ventures subsequently agreed to invest $100 million in Payward as part of the arrangement.
What did OKXICE file to list on X Layer?
OKXICE, the ICE-OKX joint venture, filed earlier this month to list 63 tokenized US stocks on X Layer. It later disclosed that nine companies whose shares were included in the proposal had raised objections.