RWA Tokenisation Explained: A Plain English Glossary

When the SEC approved Nasdaq's tokenised securities proposal on 18 March 2026, the coverage was widespread. What received far less attention was the vocabulary. Terms like “CUSIP,” “T+1 settlement,” and “on-chain equities” appeared in articles without explanation, leaving most readers to either search each one separately or simply move on.

This glossary fixes that. Each entry below is defined in plain English, with enough context to understand not just what the term means, but why it matters, particularly for investors and fintech builders operating outside the United States.

RWA Tokenisation

“The real-world asset tokenisation market reached $19.3 billion by the end of Q1 2026, according to CoinGecko, a 257% increase from the start of 2025. Tokenised stocks specifically reached roughly $960 million by March 2026.”

Real-world asset tokenisation is the process of putting ownership of a physical or financial asset onto a blockchain. Rather than a traditional paper certificate or a record in a centralised database, the asset is represented by a digital token on a distributed ledger.

The assets in question can be almost anything with measurable value: property, government bonds, private credit, and now, under the SEC's March 2026 ruling, publicly traded US stocks and ETFs. For investors in any market that has historically struggled to access US equities, the tokenisation of equities translates to a potential route around the brokerage requirements, currency conversion costs, and regulatory friction that have kept American markets out of reach for most of the world's retail investors.

Tokenised Security

A tokenised security is a traditional financial security, a stock, an ETF, or a bond, whose ownership record is held on a blockchain rather than inside a conventional clearinghouse database.

The legal distinction that separates a genuine tokenised security from similar-sounding products is the equivalence of rights. Under Nasdaq's approved framework, a tokenised security must carry the same CUSIP number, the same ticker symbol, and the same shareholder protections as its traditional counterpart. That means the holder receives voting rights, dividend entitlements, and liquidation rights. Products that fall short of this standard are treated as distinct instruments and may be reclassified as derivatives.

This matters in practice. Before this ruling, several platforms in Europe were selling what they called “tokenised equities,” but those products were really just economic exposure to a stock's price movement. Buyers had no voting rights, no dividend rights, and no direct claim on the company. Under Nasdaq's rules, that kind of product would not qualify as a tokenised security.

CUSIP Number

A CUSIP is a nine-character alphanumeric code that uniquely identifies a financial security in the United States. The acronym stands for Committee on Uniform Security Identification Procedures.

Every US-listed stock and bond has one. Think of it as the security's official identification number, assigned at the point of issuance and attached to it permanently. When Nasdaq's approved rules require a tokenised security to share the same CUSIP number as its traditional counterpart, the requirement is doing concrete legal work. It confirms the token represents actual ownership in the same underlying asset, not a parallel product or a synthetic copy.

DTC Meaning in Finance

The Depository Trust Company is the central securities depository for the United States. It holds and tracks ownership of virtually all US-listed securities on behalf of banks, brokerages, and other financial institutions.

When a retail investor buys a stock through a brokerage, they do not receive a physical certificate. What they actually hold is a claim against a position that their broker maintains at DTC. DTC is the operational backbone of US settlement, processing trillions of dollars in transactions each day while remaining largely invisible to end investors.

Under Nasdaq's tokenisation framework, DTC serves as the post-trade engine. Once a trade is flagged for tokenised settlement, Nasdaq passes the instruction to DTC, which converts the book-entry position into a token and delivers it to the participant's registered blockchain wallet. The DTC pilot programme that enables this covers Russell 1000 securities and major index ETFs, and runs for three years from the point of launch. Access to the pilot is restricted to institutional participants at this stage, with broader availability expected as the infrastructure matures.

T+1 Settlement

Settlement is the process of formally transferring ownership of a security after a trade has been agreed. T+1 means settlement occurs one business day after the trade date. The “T” stands for the transaction date.

The US market moved from a T+2 standard to T+1 in 2023 following an SEC rule change. A common question about tokenised securities is whether blockchain infrastructure could support same-day or even instant settlement, sometimes referred to as T+0. The answer, under Nasdaq's current approved framework, is that T+1 remains the standard even for tokenised trades. Faster settlement is technically achievable on-chain, but it is outside the scope of this first phase.

Order Book in Trading

An order book is the real-time list of all active buy and sell orders for a security on an exchange. Every time someone places a trade, that order joins the queue. The exchange's matching engine works through the book, pairing buyers with sellers at agreed prices.

Order books are fundamental to how price discovery works. When there are many buyers and sellers actively posting orders, the spread between the best bid price and the best offer price narrows, and trades execute efficiently. When liquidity is thin, the spread widens, and prices become less reliable.

The reason order books matter in the context of tokenised securities is a question of fragmentation. Some early tokenisation platforms operated their own separate order books, which meant tokenised stocks and traditional stocks were priced independently. The results were damaging: in July 2025, reports emerged that tokenised versions of Apple and Amazon on certain crypto exchanges were trading at prices more than 300% off from the underlying stock. Nasdaq's approved framework addresses this directly. Tokenised securities and traditional securities trade on the same order book with identical execution priority. There is no separate queue, no separate pricing mechanism, and no structural reason for the prices to diverge.

SR-NASDAQ-2025-072

SR-NASDAQ-2025-072 is the official filing reference for Nasdaq's proposed rule change to enable tokenised securities trading on its exchange. “SR” stands for Self-Regulatory Organisation, “NASDAQ” identifies the filer, “2025” is the year of submission, and “072” is the sequential filing number for that year.

Nasdaq submitted the original proposal on 8 September 2025. The SEC published it for public comment on 22 September 2025. The Commission then instituted proceedings in December 2025 to assess whether to approve or disapprove it, and Nasdaq filed two subsequent amendments to address regulatory feedback. The SEC issued its approval order on 18 March 2026.

The filing reference appears in SEC releases as 34-103989 (the initial notice), 34-104384 (the proceedings order), 34-104693 (the amended filing), and 34-105047 (the final approval). When financial media refer to the “Nasdaq tokenisation ruling” or the “SEC-approved tokenised stocks” decision, SR-NASDAQ-2025-072 is the document trail behind that coverage.

Pilot Programme in Finance

A pilot programme in financial regulation is a time-limited, condition-bound trial that allows a new product or process to operate before full regulatory rules are in place. It gives both the regulator and market participants a structured way to test something new without committing to a permanent framework.

The DTC pilot programme at the centre of Nasdaq's tokenisation framework was authorised through an SEC no-action letter issued on 11 December 2025. A no-action letter is a formal SEC staff communication stating that, under the specific conditions described, the staff will not recommend enforcement action. It is not a permanent rule change, but it carries enough regulatory weight to allow real operations to proceed.

Under the DTC pilot, eligible participants can have their security entitlements recorded on a blockchain rather than in a conventional book-entry system, and transfer those tokenised entitlements to other registered wallets without DTC needing to process each transfer individually. The pilot runs for three years from launch. DTC has indicated the infrastructure may be ready in the second half of 2026. Only securities in the Russell 1000 Index and ETFs tracking major indices such as the S&P 500 and Nasdaq-100 are eligible under the current scope.

Russell 1000

The Russell 1000 is a stock market index that tracks the 1,000 largest publicly listed companies in the United States by market capitalisation. It is a subset of the broader Russell 3000 index and is maintained by FTSE Russell.

The Russell 1000 covers approximately 93% of the total US equity market by value. Its constituents include the dominant names in American technology, healthcare, finance, and consumer goods. When the DTC pilot programme lists "securities in the Russell 1000 Index" as eligible for tokenisation, it is opening access to the bulk of meaningful US equity exposure, the companies whose compounding returns have driven the interest in US markets from investors worldwide.

On-Chain Settlement

On-chain settlement refers to the process of finalising a financial transaction directly on a blockchain, with the transfer of ownership recorded on the distributed ledger rather than inside a conventional clearinghouse database.

In traditional securities markets, settlement involves multiple intermediaries: brokers, clearing houses, custodians, and central depositories like DTC. Each plays a role in confirming and recording the trade. On-chain settlement compresses parts of this chain. The blockchain itself serves as the record of ownership, and transfers can occur between registered wallets without requiring each step to be processed by a separate institution.

Under Nasdaq's current framework, on-chain settlement is partial rather than complete. DTC converts a traditional book-entry position into a token and delivers it to a participant's registered wallet, but the trade still clears through DTC and still settles on a T+1 basis. Pure blockchain-based settlement, where trades finalise instantly without any centralised intermediary, remains a longer-term development. What the DTC pilot represents is the blockchain settlement layer being built into existing infrastructure, rather than replacing it.

The terms above are defined for general informational purposes. They reflect the regulatory and market context as of May 2026.