Nasdaq teams up with Kraken to expand tokenization infrastructure

March 9 (Reuters) - Nasdaq NDAQ.O on Monday announced it will collaborate with Payward, parent company of cryptocurrency exchange Kraken, to develop tokenization infrastructure, aiming to capitalize on the growing interest in blockchain-based equities.

Tokenization is the process of turning financial assets - such as bank deposits, stocks, bonds, funds and even real estate - into crypto assets that can be traded on blockchains, which are the ledgers underpinning digital assets.

• In September, the exchange operator sought Securities and Exchange Commission approval to allow trading in "either traditional digital or tokenized form".

• Institutional adoption of digital asset infrastructure has advanced after the passage of the GENIUS Act last year, with more regulation still being discussed.

• In January, NYSE parent Intercontinental Exchange ICE.N said it was seeking regulatory approval for a blockchain-based platform to enable 24/7 trading and on-chain settlement of tokenized securities.

• Robinhood HOOD.O, Gemini GEMI.O and Kraken have already launched tokenized stocks in Europe, while Coinbase COIN.O and startup Dinari are seeking approval for similar products in the U.S.

• However, with bitcoin hovering around levels seen before the 2024 presidential election victory of Donald Trump, investors continue to be split on the role of cryptocurrencies in portfolios.

• Under the partnership, Nasdaq will use Payward's xStocks, a tokenization platform, to enable clients to move securities from institutional trading infrastructure to blockchain networks.

• Nasdaq said that plans for tokenizing stocks and other exchange-traded products will focus on corporate actions, proxy voting and shareholder engagement.

• "Tokenization has the potential to unlock the benefits of an always-on financial ecosystem – enhancing how investors access markets, how issuers engage with shareholders," said Tal Cohen, president, Nasdaq.