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The U.S. Securities and Exchange Commission (SEC), Wall Street's regulator, has approved the Nasdaq (NASDAQ: $NDAQ ) exchange's proposal to allow trading in tokenized stocks.

The approval marks a major milestone in the effort to integrate blockchain technology into U.S. stock markets, say analysts.

Tokenized stocks are digital assets on a blockchain that represent ownership or economic exposure to traditional company shares such as Apple (NASDAQ: $AAPL ) or Tesla (NASDAQ: $TSLA ).

Nasdaq has said that the Depository Trust Company will handle clearing and settlement of tokenized trades on its exchange.

Going forward, investors will be able to choose to have trades settled as blockchain-based tokens rather than standard securities.

Tokenized shares will trade alongside traditional shares of stocks such as Nvidia (NASDAQ: $NVDA ) and Amazon (NASDAQ: $AMZN ) on the Nasdaq exchange, and at the same price.

Tokenized stocks will also carry the same rights as traditional equities, use the same ticker symbols, and be subject to existing market rules, says Nasdaq.

The SEC said it approved the move into tokenized stocks because the structure meets investor protection standards.

The move comes as tokenization of traditional assets like stocks, bonds and various funds have become a fast-growing area of the cryptocurrency space.

The process will allow for near-instant, around-the-clock trading with tokens tied to real-world assets such as traditional stocks.

Nasdaq said earlier in March that it is rushing to develop a framework that will allow publicly listed companies to issue blockchain-based versions of their shares.

Nasdaq has partnered with cryptocurrency exchange Kraken to distribute tokenized stocks worldwide.

At the same time, Intercontinental Exchange (NYSE: $ICE ), the owner of the New York Stock Exchange (NYSE), has invested in crypto exchange OKX with plans to also launch tokenized stocks.

The Nasdaq exchange is heavily concentrated in stocks of technology companies. NDAQ stock has risen 12% in the past year to trade at $85.44 U.S. a share.