Global financing company and stock exchange Nasdaq Inc. today announced it has invested $100 million in Payward Inc., the parent company of cryptocurrency exchange Kraken, expanding its relationship to advance work on a new token framework for equities.
In March, the company announced plans to develop Nasdaq Equity Tokens in collaboration with Payward. It introduced an accompanying framework to connect them to Payward’s xStocks ecosystem, laying the groundwork for tokenizing and issuing equities across different market environments while preserving investors’ rights and protections.
Equity tokenization converts traditional company shares into digital tokens recorded on a blockchain network. This creates a digital representation in which shares are issued or mirrored as cryptographic tokens on a distributed ledger rather than paper certificates within a centralized exchange. The tokens are represented by smart contracts on a blockchain network, where programmable code automates corporate activities such as dividend distribution, compliance and voting.
Nasdaq said the company’s markets business division, Digital Liquidity Networks, will lead the collaboration and focus on building always-on market infrastructure for capital and assets.
“The next era of market evolution will be defined by how efficiently and seamlessly capital and assets move across the financial system with durable liquidity,” said Nasdaq President Tal Cohen.
Payward Co-Chief Executive Arjun Sethi added that more than $2 trillion of stock trades run through the United States clearing system every day. And that buys and sells net about 98%, where clearing houses hold $10 billion to $20 billion in collateral for about a day to settle.
“Cutting that wait from two days to one in 2024 released $3 billion,” he said. “On-chain settlement removes the wait.”
As part of the expanded relationship, Payward will adopt Nasdaq’s market-leading audit technology across its portfolio of trading venues, including crypto, equities, tokenized equities, futures and options. Adding these features and increased collaboration will increase market integrity and investor confidence for modern tokenized market infrastructure.
Tokenized equities are changing how assets are exchanged on markets. Nasdaq, New Your Stock Exchange LLC and Depository Trust Co. are beginning to bring stock trading onto blockchain-style trading without creating a separate crypto market. By using similar emerging frameworks, certain existing shares and exchange-traded funds can be issued or represented in tokenized forms while retaining the same ticker, legal rights and regulated trading venues.
In plain English, the goal is not to replace the stock market with tokens, but to update the back-end plumbing so the same securities can eventually move, settle and be recorded more efficiently on digital ledgers.
