Kraken Powers Nasdaq's Move To Put Equities on the Blockchain

Global cryptocurrency exchange Kraken, operating through its parent entity Payward, has announced a partnership with stock exchange operator Nasdaq to develop infrastructure connecting tokenised equity capital markets with decentralised blockchain networks.

The collaboration centres on xStocks, Kraken's tokenised equity product, which will serve as the permissionless infrastructure layer supporting Nasdaq's issuer-sponsored equity tokens. The framework is designed to allow tokenised equities to move between regulated, permissioned capital markets and open blockchain ecosystems in eligible jurisdictions.

Since launching less than a year ago, xStocks has surpassed $25 billion in total transaction volume, with more than $4 billion settled on-chain. The product now counts over 85,000 unique holders across supported networks.

At the centre of the initiative is an equities transformation gateway being built jointly by the two organisations. The gateway will allow clients in eligible jurisdictions to swap tokenised equities between a regulated, permissioned market environment and the permissionless decentralised finance ecosystem, enabling assets to move between institutional trading infrastructure and on-chain financial networks.

Nasdaq's equity token design, the new framework for tokenising equities underpinning the arrangement, is expected to become operational in the first half of 2027. The design is intended to preserve issuer control, existing regulatory frameworks, and the underlying rights associated with company shares.

Under the terms of the partnership, Payward will serve as the primary and foundational settlement layer for Nasdaq equity token design transactions for an initial period in eligible jurisdictions. Compliance onboarding, including KYC and AML processes for participants accessing the gateway, will be handled by Payward Services.

Arjun Sethi, Co-CEO of Payward and Kraken, set out the commercial rationale for the partnership:
 

"Tokenization upgrades market infrastructure at the asset layer by allowing equities to exist as programmable financial instruments that can operate across both regulated capital markets and open blockchain networks. Today most equities sit inside brokerage systems where their utility is largely limited to directional exposure and, in some cases, broker-specific margin arrangements."

"That structure fragments liquidity across venues and leaves a meaningful amount of capital static relative to its potential utility. With xStocks, our goal is to make equities natively interoperable across trading venues, financial applications and blockchain networks while preserving issuer rights regulatory protections and price integrity."

"Bringing equities onto programmable infrastructure expands how they can function within a portfolio. Instead of simply representing exposure to a company, tokenized equities can operate as collateral within unified trading systems that support spot markets, cross-margin trading, derivatives, perpetual futures, and financing environments."

"If collateral is represented as C and gross market exposure as 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 base collateral C can support multiple strategies simultaneously and effective exposure becomes the sum of all positions: E_total = Σ E_i."

"This increases capital utilization across trading environments while maintaining risk constraints enforced by a unified real time margin framework."

"For international customers, tokenized equities expand access to public markets in regions where traditional brokerage distribution is limited or operationally complex. For customers operating within more developed financial markets the opportunity is capital efficiency, allowing equity collateral to participate more fluidly across trading, lending, and hedging strategies within a shared liquidity and risk framework."

"When collateral can move programmatically between systems settlement friction decreases 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 allow tokenized equities to function within a more global, continuous and capital efficient financial system."

The gateway will be available to clients in jurisdictions where xStocks are available and where Payward holds the relevant registrations, licences, and approvals.

xStocks are issued by Backed Assets (JE) Limited and are not registered under the U.S. Securities Act. They are not available in the United States, to U.S. persons, or in the United Kingdom.

Found this interesting? Become a member of LiquidityFinder and get daily industry news direct to your inbox — join here.