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.
Separately, Nasdaq also announced a partnership with German exchange operator Boerse Stuttgart's tokenization settlement platform to facilitate trading of blockhain-based equities across Europe.
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.
