Tokenized equities gateway powered by xStocks for markets

In a landmark move for digital finance, Nasdaq and Payward are collaborating to expand the reach of tokenized equities across both traditional and decentralized markets.

Nasdaq teams up with Payward and Kraken on xStocks

Payward, parent company of global crypto exchange Kraken and developer of the xStocks token framework, has entered a strategic partnership with Nasdaq to build next-generation infrastructure linking tokenized equity markets with decentralized blockchain networks.

Since launch less than a year ago, xStocks have generated more than $25 billion in total transaction volume, including over $4 billion settled on-chain, with more than 85,000 unique holders across supported networks. This rapid growth underscores rising institutional and retail interest in tokenized exposure to publicly traded equities across multiple chains.

The collaboration centers on Nasdaq’s upcoming equity token design, a new model for digitizing shares that maintains regulatory oversight, issuer control, and the existing shareholder rights attached to company stock. Moreover, the partners aim to ensure that the new tokens integrate cleanly with current capital markets infrastructure rather than operating as a parallel, disconnected system.

Strategy behind the equities transformation gateway

As part of the agreement, Nasdaq and Payward will build an equities transformation gateway powered by the xStocks framework. This gateway is designed to connect regulated, permissioned equity markets with permissionless decentralized financial networks in jurisdictions where xStocks products are available and compliant.

Within this architecture, the xStocks framework will serve as the core infrastructure layer for the permissionless environment. However, it will remain tightly aligned with the underlying securities traded in regulated venues, ensuring that on-chain tokens accurately mirror off-chain equity positions in price, rights, and regulatory treatment.

The gateway will let eligible clients seamlessly swap tokenized representations of equities between a regulated, permissioned market and the open DeFi ecosystem. That said, the design seeks to preserve institutional trading standards while allowing assets to move fluidly between traditional trading systems and global on-chain financial networks.

Connecting regulated markets and decentralized networks

To safeguard market integrity, Payward Services will manage KYC and AML onboarding for tokenized equities via the Kraken platform. This will ensure that participants using the gateway between regulated permissioned equity venues and permissionless decentralized environments meet applicable compliance standards in each relevant jurisdiction.

In regions where clients can already trade xStocks, Payward will initially act as the primary settlement layer for Nasdaq equity tokens transactions. Moreover, this role will provide the foundational infrastructure required for secure and efficient onchain equity settlement across the connected networks, at least during the early phase of deployment.

By linking Nasdaq’s market infrastructure with the broader xStocks ecosystem, the gateway is intended to create interoperability between institutional trading environments and decentralized blockchain systems. This setup should allow equity securities to move seamlessly between regulated capital markets and global on-chain networks while preserving issuer rights, regulatory compliance, and price integrity.

The new equities transformation gateway will be offered only in jurisdictions where xStocks are available and where Payward holds the required registrations, licenses, and approvals to provide such services. However, the long-term ambition is to extend this model to a broader range of markets as regulations evolve.

Arjun Sethi on capital efficiency and liquidity

According to Arjun Sethi, Co-CEO of Payward and Kraken, tokenization modernizes the asset layer of market infrastructure by enabling equities to function as programmable instruments across both regulated capital markets and open blockchain networks. Today, most shares sit inside brokerage systems, where they primarily offer directional exposure and, in some cases, broker-specific margin.

Sethi argues that this structure fragments liquidity across venues and keeps a significant portion of capital static relative to its potential uses. With xStocks, Payward’s objective is to make equities interoperable across trading venues, financial applications, and blockchain networks, while still preserving issuer rights, regulatory protections, and price integrity. Moreover, this design seeks to unlock new use cases for equity assets beyond traditional buy-and-hold strategies.

He also emphasizes that bringing tokenized equities into a programmable setting transforms how they function within portfolios. Instead of merely signaling exposure to a company, tokenized shares can serve as collateral within unified trading systems that support spot markets, cross-margin derivatives, perpetual futures, and various financing environments.

Capital utilization and risk management

In traditional setups, portfolio capital efficiency is constrained because collateral cannot move freely between venues and products. Sethi explains this using a basic formulation where collateral is represented as C and gross market exposure as E, so portfolio utilization is expressed as:

U = E / C

In fragmented infrastructures, U is artificially capped because each venue requires its own isolated collateral. However, when assets become interoperable across markets, the same base collateral C can support multiple strategies simultaneously, and effective exposure turns into the sum of all positions:

E_total = Σ E_i

This structure increases capital utilization across trading environments while maintaining risk constraints via a unified real-time margin framework. Moreover, the partners believe this approach could make institutional strategies more capital-efficient without compromising risk controls.

Global access and the role of DeFi

For international customers, tokenized shares can broaden access to public markets in regions where traditional brokerage distribution is limited or operationally complex. That said, the model is also attractive for participants in more developed financial centers, where the key advantage becomes capital efficiency and more flexible use of equity collateral across trading, lending, and hedging strategies.

When collateral can move programmatically between systems, settlement frictions decline, and capital can shift more dynamically between strategies and markets. This dynamic is central to the vision of a regulated defi bridge that maintains compliance while letting assets flow more freely across infrastructures.

As tokenized assets continue expanding across blockchain ecosystems, Payward and its partners aim to establish robust infrastructure that lets regulated securities interact with decentralized markets in a secure and interoperable way. Moreover, the companies expect that this model could eventually support a wide range of asset classes beyond equities.

Roadmap and outlook for 2027

Nasdaq expects its equity token design and related distributed ledger technology (DLT)-based services to become operational starting in H1 2027. The timeline highlights the scale of technical, regulatory, and integration work required to fully embed tokenized instruments into the global financial system.

Commenting on the partnership, Sethi notes that tokenization in isolation does not create functioning markets. Markets require liquidity, robust 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, the group aims to build the liquidity layer, risk engine, and financial applications needed for tokenized equities to operate inside a more global, continuous, and capital-efficient financial system.

Overall, the collaboration between Nasdaq and Payward marks a significant step in bringing traditional equity markets closer to decentralized finance. If successful, it could help define how tokenized equities integrate with both institutional trading environments and open blockchain networks over the coming years.