TL;DR
- Payward has partnered with Nasdaq to create an equity transformation gateway which connects tokenized capital markets to decentralized blockchain networks, combining Nasdaq’s regulated market infrastructure with Kraken’s xStocks framework to enable tokenized stocks to move seamlessly between permissioned institutional markets and permissionless DeFi ecosystems.
- xStocks, Kraken’s tokenized stock product, surpassed $25 billion in total trading volume since its launch less than a year ago (including over $4 billion settled on-chain) with over 85,000 unique holders across supported networksestablishing it as a leading infrastructure layer for tokenized actions on the blockchain.
- The Nasdaq Stock Token design, which is expected to become operational in the first half of 2027, constitutes a new framework for stock tokenization. that preserves issuer control, existing regulatory frameworks and rights underlying the company’s shares; Kraken/Payward will serve as primary settlement layer for these transactions in eligible jurisdictions, Payward Services providing KYC and AML integration compliance.
The next chapter for tokenized stocks
We are excited to announce a partnership with Nasdaq to develop next-generation infrastructure connecting tokenized capital markets to decentralized blockchain networks.
The initiative will build on the growing adoption of xStocks, which provide tokenized exposure to publicly traded stocks in blockchain ecosystems. Since its launch less than a year ago, xStocks has surpassed $25 billion in total trading volume, including over $4 billion settled on-chain, with over 85,000 unique holders across supported networks.
The collaboration will support the upcoming design of the Nasdaq Stock Token, a new approach to stock tokenization that will support stock tokenization in a way that preserves issuer control, existing regulatory frameworks, and underlying rights associated with company stock.
Both organizations believe that tokenization has the potential to transform capital markets, modernizing the way securities are traded and settled while enabling greater global access, greater programmability and greater operational efficiencies across financial infrastructure.
Building the infrastructure for tokenized equity markets
As part of this partnership, we will develop a Stock Transformation Gateway with Nasdaq, powered by the xStocks framework and designed to connect regulated and permissioned stock markets to permissionless decentralized financial networks in jurisdictions where xStocks is available.
Within this architecture, the xStocks framework will serve as an infrastructure layer powering the permissionless ecosystem, allowing tokenized stocks to interact with open blockchain networks while remaining aligned with the underlying securities traded on regulated markets.
The gateway will enable customers in eligible jurisdictions to seamlessly trade tokenized stocks between a regulated, permissioned market environment and the DeFi ecosystem without permission, allowing assets to flow seamlessly between institutional trading infrastructure and global on-chain financial networks.
Connecting regulated markets to on-chain financial networks
To support the integrity of the ecosystem, Payward Services will provide tokenized KYC and AML onboarding actions through the Kraken platform, ensuring that participants accessing the gateway between regulated permissioned equity markets and the decentralized ecosystem without permission meet applicable compliance requirements in the relevant jurisdictions.
Additionally, in eligible jurisdictions where customers can trade xStocks today, Payward will serve as the primary and foundational settlement layer for Nasdaq stock token design transactions for an initial period, providing the infrastructure necessary to enable secure and efficient tokenized stock settlement across connected networks.
By connecting Nasdaq’s market infrastructure to the xStocks ecosystem, the gateway is designed to create interoperability between institutional trading environments and decentralized networks. This architecture allows equity securities to flow seamlessly between regulated capital markets and global on-chain networks, while preserving issuer rights, regulatory compliance and pricing integrity.
The Stock Transformation Gateway will be available to customers in jurisdictions where xStocks are available and Payward is duly registered, licensed and approved to offer them.*
As tokenized assets continue to expand across blockchain ecosystems, Payward and its partners aim to establish infrastructure for regulated securities to interact with decentralized markets in a secure and interoperable manner.
Arjun Sethi, co-CEO of Payward and Kraken: “Tokenization improves market infrastructure at the asset level by allowing stocks to exist as programmable financial instruments that can operate on both regulated capital markets and open blockchain networks. Today, most stocks are found in brokerage systems where their utility is largely limited to directional exposure and, in some cases, broker-specific margin agreements.”
“This structure fragments liquidity across venues and leaves a significant amount of capital static relative to its potential utility. With xStocks, our goal is to make stocks natively interoperable across trading platforms, financial applications, and blockchain networks while preserving regulatory protections of issuer rights and price integrity.”
“Integrating stocks into programmable infrastructure expands their operation within a portfolio. Instead of simply representing exposure to a company, tokenized stocks can function as collateral within unified trading systems that support spot markets, cross-margin trading, derivatives, perpetual futures, and funding environments.”
“If collateral is represented by C and gross market exposure by E, then portfolio utilization can be expressed as: U = E/C. In fragmented systems, U is artificially capped because each venue requires isolated collateral. When assets become interoperable across markets, the same basic collateral C can support multiple strategies simultaneously and the effective exposure becomes the sum of all positions: E_total = Σ E_i.”
“This increases capital utilization across all trading environments while maintaining the risk constraints imposed by a unified real-time margin framework.”
“For international clients, tokenized equities expand access to public markets in regions where traditional brokerage distribution is limited or operationally complex. For clients operating in more developed financial markets, the opportunity is capital efficiency, allowing equity collateral to more easily participate in trading, lending and hedging strategies within a framework of liquidity and shared risk.”
“When collateral can move programmatically between systems, settlement friction is reduced and capital can move more dynamically between strategies and markets. »
“Our partnership with Nasdaq is important because tokenization alone does not create markets. Markets require liquidity risk management and reliable infrastructure. By combining Nasdaq’s leadership in regulated equity markets with Payward’s digital asset infrastructure and Kraken’s global trading platform, we are helping build the liquidity layer risk engine and financial applications that enable tokenized stocks to operate in a more global, seamless and capital-efficient financial system.”
Nasdaq expects its Nasdaq stock token design and associated services based on distributed ledger technology (DLT) to become operational beginning in the first half of 2027.
*xStocks are not registered under the US Securities Act and are not available in the United States or to US persons. xStocks are also not currently available in the United Kingdom or any other jurisdiction where their offering or distribution would be illegal or would require regulatory approval which has not been obtained.
xStocks are issued by Backed Assets (JE) Limited (a Jersey limited company) and offered to eligible Kraken customers via Payward Digital Solutions Ltd. (“PDSL”), a company authorized to carry out digital asset business by the Bermuda Monetary Authority. In the European Union/European Economic Area, xStocks are offered to eligible customers through Payward Europe Digital Solutions (CY) Ltd. (“PEDLS-CY”), a Cypriot investment company authorized and regulated by EU MiFID II.
Neither PDSL, Payward Europe Digital Solutions (CY) Ltd. (“PEDLS-CY”) nor their respective affiliates provide investment advice or recommendations, PDSL (Kraken) does not provide investment advice and/or recommendations, and no communication, whether through any Kraken application or website or otherwise, should be construed as such. Individual investors should make their own decisions or seek independent professional advice if they are unsure about the suitability of an investment for their circumstances or needs, including potential tax treatment. Investing in xStocks involves an element of risk. The value of an investment can go up as well as down, and past performance is not a reliable indicator of future results. Geographic restrictions apply. Read Kraken’s xStocks Risk Disclosure at kraken.com/legal/xstocks and the base prospectus and associated final terms for xStocks at to learn more.
