TL;DR

• Payward has partnered with Nasdaq to build an equities transformation gateway that connects tokenized equity capital markets with decentralized blockchain networks, combining Nasdaq’s regulated market infrastructure with Kraken’s xStocks framework to enable tokenized equities to move fluidly between permissioned institutional markets and permissionless DeFi ecosystems.
  
• xStocks, Kraken’s tokenized equity product, has surpassed $25 billion in total transaction volume since launching less than a year ago (including more than $4 billion settled on-chain) with over 85,000 unique holders across supported networks, establishing it as a leading infrastructure layer for tokenized equities on blockchain.
  
• Nasdaq’s equity token design, expected to become operational in H1 2027, is a new framework for tokenizing equities that preserves issuer control, existing regulatory frameworks, and the underlying rights of company shares; Kraken/Payward will serve as the primary settlement layer for these transactions in eligible jurisdictions, with Payward Services providing KYC and AML onboarding compliance.

The next chapter for tokenized equities

We’re excited to announce a partnership with Nasdaq to develop next-generation infrastructure connecting tokenized equity capital markets with decentralized blockchain networks.

The initiative will build on the growing adoption of xStocks, which provide tokenized exposure to publicly traded equities across blockchain ecosystems. Since launching less than a year ago, xStocks have surpassed $25 billion in total transaction volume, including more than $4 billion settled on-chain, with over 85,000 unique holders across supported networks.

The collaboration will support the upcoming Nasdaq equity token design, a new approach to tokenizing equities that will support tokenization of equities in a manner that preserves issuer control, existing regulatory frameworks, and the underlying rights associated with company shares.

Both organizations believe tokenization has the potential to transform capital markets, modernizing how securities are traded and settled while enabling greater global access, programmability, and operational efficiency across financial infrastructure.

Building the infrastructure for tokenized equity markets

As part of the partnership, we will develop an equities transformation gateway with Nasdaq that is powered by the xStocks framework and designed to connect regulated, permissioned equity markets with permissionless decentralized financial networks in jurisdictions where xStocks are available.

Within this architecture, the xStocks framework will serve as the infrastructure layer powering the permissionless ecosystem, enabling tokenized equities to interact with open blockchain networks while remaining aligned with the underlying securities traded within regulated markets.

The gateway will allow clients in eligible jurisdictions to seamlessly swap tokenized equities between a regulated, permissioned market environment and the permissionless DeFi ecosystem, enabling assets to move fluidly between institutional trading infrastructure and global on-chain financial networks.

Connecting regulated markets with on-chain financial networks

To support the integrity of the ecosystem, Payward Services will provide KYC and AML onboarding tokenized equities through the Kraken platform, ensuring participants accessing the gateway between regulated permissioned equity markets and the permissionless decentralized ecosystem meet applicable compliance requirements in relevant jurisdictions.

In addition, in eligible jurisdictions where clients can trade xStocks today, Payward will serve as the primary and foundational settlement layer for Nasdaq equity token design transactions for an initial period, providing the infrastructure necessary to enable secure and efficient tokenized equity settlement across connected networks.

By connecting Nasdaq’s market infrastructure with the xStocks ecosystem, the gateway is designed to create interoperability between institutional trading environments and decentralized networks. This architecture allows equity securities to move fluidly between regulated capital markets and global onchain networks, while preserving issuer rights, regulatory compliance, and price integrity.

The equities transformation gateway will be available to clients in jurisdictions where xStocks are available and where Payward is appropriately registered, licensed, and approved to offer such.*

As tokenized assets continue to expand across blockchain ecosystems, Payward and its partners aim to establish infrastructure that enables regulated securities to interact with decentralized markets in a secure and interoperable way.

Arjun Sethi, Co-CEO of Payward and Kraken: “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.”

Nasdaq expects its Nasdaq equity tokens design and related distributed ledger technology (DLT)-based services to become operational beginning in H1 2027.

* xStocks are not registered under the U.S. Securities Act and are not available in the United States or to U.S. persons. xStocks are also not currently available in the United Kingdom or in any other jurisdiction where their offer or distribution would be unlawful or would require regulatory authorization that has not been obtained.

xStocks are issued by Backed Assets (JE) Limited (a Jersey private limited company) and offered to eligible Kraken customers via Payward Digital Solutions Ltd. (“PDSL”), a company licensed to conduct digital asset business by the Bermuda Monetary Authority. In the European Union / European Economic Area, xStocks are offered to eligible customers via Payward Europe Digital Solutions (CY) Ltd. (“PEDLS-CY”), a Cyprus investment firm authorized and regulated under 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, through any Kraken App or website or otherwise, should be construed as such. Individual investors should make their own decisions or seek professional independent advice if they are unsure as to the suitability / appropriateness of any investment for their circumstances or needs, including potential tax treatment. Investing in xStocks involves an element of risk. The value of an investment may go down as well as up, and past performance is not a reliable indicator of future results. Geo restrictions apply. Read Kraken’s xStocks Risk Disclosure at kraken.com/legal/xstocks as well as the Base Prospectus and related Final Terms for xStocks at https://assets.backed.fi/legal-documentation to learn more.