Nasdaq CEO Says Tokenization Could Free Tens of Billions in Collateral, Offers No Math

Nasdaq CEO Adena Friedman says tokenization could release tens of billions of dollars now locked up as collateral across the global financial system. She made the case in an interview with CNBC's Joanna Ossinger at the TOKEN2049 conference in Singapore.

The number is Friedman's own estimate. She did not say how she arrived at it.

The collateral argument

The pitch is simple. Collateral sits parked in Treasurys, equities and money market funds, and moving it between institutions is slow.

"If you tokenize all those instruments along with the flow of money, then the collateral becomes very fluid," Friedman said.

Tokenization means representing a financial asset, such as a stock or bond, as a digital token that moves over blockchain rails. Friedman tied the idea to money itself: "If we can tokenize money, then we can tokenize the flow of capital."

She credited the Genius Act, the U.S. law that set up a regulatory framework for stablecoins, with lifting institutional interest over the past year. She also said retail investors, who have long wanted to trade around the clock, have been "about 10 years ahead" of the institutions.

What Nasdaq is already building

Nasdaq is partnering with Payward, the parent company of crypto exchange Kraken and the infrastructure provider behind xStocks, on what it calls an equities transformation gateway. The stated aim is to connect regulated, permissioned market infrastructure with permissionless blockchain networks where tokenized equities can circulate. The two companies are developing Nasdaq Equity Tokens.

The Securities and Exchange Commission approved a Nasdaq pilot in March that lets Russell 1000 stocks and major index ETFs settle as blockchain tokens. A tokenized share trades on the same order book, at the same price and under the same ticker as the regular share. Only the settlement location changes, from the Depository Trust Company's book-entry system to a blockchain.

Separately, the DTCC is running a three-year pilot that starts with tokenized Treasury entitlements before moving to equities. Treasurys are the core collateral asset in Friedman's argument.

Arjun Sethi, Kraken's co-CEO, told CNBC that foreign companies are looking at tokenization as a route into American capital markets. He cited one firm with roughly $25 million in revenue exploring ways to access those markets, along with larger international companies interested in tokenization and U.S. listings.

The hard part is 24/7

Friedman was blunt that the exchange side is the easy piece. "The easiest part is the exchange infrastructure," she said.

Banks and other institutions have always used closed hours to update systems and manage risk. Continuous trading pulls risk and collateral management into real time. "Everything has to be real time all the time," she said.

Her answer is artificial intelligence. Nasdaq has launched digital agents inside its risk management platform. For now they make recommendations. Friedman said banks could eventually let such agents act more directly. "AI is critical for 24/7," she said.

She also drew a limit on her own pitch. "Not every asset is liquid enough to support a 24/7 environment," Friedman said.

The gap between pitch and product

That caveat matches Nasdaq's own timeline. The exchange is targeting Dec. 6 for a 23-hour, five-day equity session, not a round-the-clock market. When Nasdaq announced the plan in April, only about 2% of its equity volume traded outside existing extended hours.

Investing Live's analysis puts the near-term reality as "a settlement pilot and a 23-hour session, not 24/7 markets." That outlet also argues the crypto upside is indirect. Ethereum hosts the largest share of tokenized assets, but the benefit depends on which chains win institutional business, and it says traders should not read headlines like this as direct buying pressure.

The push for tokenized equities also draws Nasdaq into closer partnership with a crypto exchange. Nasdaq has not said how the pilot's results will be measured or what volume would count as success.

Two things are scheduled. The Dec. 6 session will test whether traditional equities can absorb overnight risk. The DTCC's three-year Treasury pilot will show whether the collateral flow Friedman describes can move onto tokenized rails. Neither has produced a number yet that supports the "tens of billions" figure.