The initiative builds on the growing adoption of xStocks, which provide tokenized exposure to publicly listed stocks within various blockchain ecosystems. Less than a year after its launch, xStocks has processed over $25 billion in total transaction value. Of that, over $4 billion is on-chain, with more than 85,000 unique holders.
The collaboration supports the upcoming Nasdaq design for stock tokens. This new approach to stock tokenization has been developed to allow the issuer to retain control. At the same time, this approach remains in line with existing regulations and the underlying rights of shareholders.
Both organizations are convinced that tokenization has the potential to fundamentally change capital markets. It can modernize the way stocks are traded and settled, while providing greater access, programmability, and operational efficiency worldwide.
'Tokenization modernizes market infrastructure. Stocks become programmable financial instruments that can function within both regulated capital markets and open blockchain networks. Today, most stocks are within brokerage systems. Their use is often limited there. This leads to fragmented liquidity and leaves a significant portion of capital untapped. With xStocks, we aim to make stocks inherently interoperable between trading platforms, financial applications, and blockchain networks. At the same time, the rights of issuers, regulations, and price integrity are preserved,' said Arjun Sethi, Co-CEO of Payward and Kraken.
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Building the Infrastructure for Markets with Tokenized Stocks
As part of the collaboration, Payward and Nasdaq are developing a so-called 'equity transformation gateway'. This gateway is powered by the xStocks framework and is intended to connect regulated, permissioned stock markets with permissionless decentralized financial networks in jurisdictions where xStocks is available.
Within this architecture, xStocks acts as the infrastructure layer for the permissionless ecosystem. This allows tokenized stocks to interact with open blockchain networks while remaining in line with the underlying regulated securities.
The gateway enables clients in suitable jurisdictions to seamlessly move tokenized stocks between regulated market environments and the permissionless DeFi environment. This allows assets to move freely between institutional trading infrastructure and global on-chain networks.
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Connecting Regulated Markets and On-Chain Financial Networks
To ensure the integrity of the ecosystem, Payward Services handles the KYC and AML onboarding of tokenized stocks via the Kraken platform. This guarantees that participants in the gateway comply with relevant regulations.
Additionally, Payward will act as the primary counterparty for transactions within the Nasdaq design for stock tokens in jurisdictions where clients can currently trade in xStocks during an initial period. This provides the necessary infrastructure for secure and efficient settlement of tokenized stocks across connected networks.
By connecting Nasdaq's market infrastructure with the xStocks ecosystem, the gateway creates a collaboration between institutional trading environments and decentralized networks. This allows stocks to move freely between regulated capital markets and global on-chain systems, while preserving shareholder rights, regulatory compliance, and price integrity.
The gateway will be available to clients in jurisdictions where xStocks is offered and where Payward has the appropriate registrations, licenses, and approvals.*
Sethi continues: 'By bringing stocks to programmable infrastructure, the way they can function within a portfolio changes. Instead of just representing exposure to a company, tokenized stocks can also serve as collateral within integrated trading systems. These systems support spot markets, cross-margin trading, derivatives, perpetual futures, and financing markets. In traditional systems, the capital efficiency of portfolios is limited because collateral cannot move freely between platforms and products.'
An investor active on multiple platforms must split their capital — and as a result, can never fully utilize it anywhere. When tokenized stocks become freely movable between markets, that limitation disappears. The same collateral can then support multiple strategies simultaneously across different platforms. The total deployability of capital increases, while risks are centrally monitored through one uniform margin system.
For international clients, tokenized stocks also enhance access to public markets in regions where traditional brokerage distribution is limited or operationally complex. For clients in more developed financial markets, the main opportunity lies in capital efficiency. Stocks can then be deployed more flexibly as collateral within trading, lending, and hedging strategies within one shared liquidity and risk framework. As collateral can move programmatically between systems, friction in settlement decreases. This allows capital to be deployed more dynamically between strategies and markets.
As tokenized assets continue to spread within blockchain ecosystems, Payward and its partners aim to build infrastructure that allows regulated securities to safely interact with decentralized markets.
Nasdaq expects its design for Nasdaq stock tokens and related services based on distributed ledger technology (DLT) to be operational from the first half of 2027.
Sethi concludes: 'Our collaboration with Nasdaq is important because tokenization alone does not create a market. Markets require liquidity, risk management, and reliable infrastructure. By combining Nasdaq's leading position in regulated stock markets with Payward's digital asset infrastructure and Kraken's global trading platform, we are building the liquidity layer, the risk engine, and the financial applications that allow tokenized stocks to function within a more global, continuous, and capital-efficient financial system.'
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