Nasdaq's Friedman Says Tokenization Could Free Tens of Billions

Nasdaq chief executive Adena Friedman says that turning traditional assets into digital tokens could release tens of billions of dollars of capital that is currently tied up and hard to use. The idea is that when an asset sits in a slow, paper-heavy or fragmented system, its owner often cannot easily sell it, borrow against it or move it elsewhere, so the value sits idle.

Tokenization means recording ownership of an asset, such as a stock, bond or fund unit, as a digital token on a shared ledger. Supporters argue this can speed up settlement, make it possible to own fractions of expensive assets, and let collateral move between markets outside traditional banking hours. Friedman's remarks put the operator of one of the world's largest stock exchanges firmly behind that case, at a time when major financial firms are running pilots of similar systems.

The "trapped capital" argument is the core of the pitch. Money locked in illiquid positions, waiting for settlement, or stuck as collateral that cannot be reused cannot be deployed somewhere else. Freeing even part of it, the reasoning goes, would give investors more flexibility and could lower funding costs for the institutions holding those assets.

There are real caveats. Tokenized assets still depend on legal frameworks that recognize digital ownership, on custody arrangements that protect investors, and on whether different platforms can work with one another. Regulators have moved carefully, and the market for tokenized securities remains small compared with the traditional system it would supplement rather than replace. Any dollar estimate of freed capital depends heavily on assumptions about how quickly adoption happens.

For Nasdaq, the stakes are commercial as well as technological. The exchange earns money from trading, listings and market data, so a faster and cheaper settlement layer could bring more activity through its infrastructure. Investors and industry watchers will likely focus less on projections and more on concrete product launches and regulatory approvals, since those will show whether the capital is truly being unlocked.