Nasdaq Taps Kraken as Settlement Layer for Tokenized Stock Initiative

Nasdaq revealed its new equity token design, emphasizing issuer control and bridging traditional financial markets with decentralized blockchain networks.

Nasdaq and Kraken announced a partnership as part of Nasdaqs tokenized equity initiative, aimed at integrating traditional capital markets with decentralized finance.

Per announcements from Kraken and Nasdaq today, March 9, the traditional brokerage giant will collaborate with Payward, Kraken‘s parent company, to develop gateway that connects permissioned and permissionless tokenized equities markets. The partnership involves connecting Nasdaq’s infrastructure with xStocks, the tokenization platform originally developed by Kraken and Backed.

The partnership was announced as part of Nasdaqs initiative to launch its new equity token design, which it says prioritizes giving public companies “more control over their shares in tokenized form.”

Per Kraken‘s announcement, Payward will provide compliance services, such as know your customer (KYC) and anti-money laundering (AML), for onboarding clients. The firm will also serve as the primary settlement layer for Nasdaq’s equity token design transactions in eligible jurisdictions — namely, where xStocks are available, which does not include the United States.

“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.,” Kraken and Paywards co-CEO, Arjun Sethi, said in the announcement.

The firms said the goal of the collaboration is to let eligible participants trade tokenized stocks “between a regulated, permissioned market environment and the permissionless DeFi ecosystem.”

Nasdaq president Tal Cohen said in a statement:

“Tokenization has the potential to unlock the benefits of an always-on financial ecosystem – enhancing how investors access markets, how issuers engage with shareholders.”

This development follows Kraken‘s recent moves in tokenized equity and TradFi. Just last week, the centralized exchange announced that xStocks is launching a cross-chain trading platform on Ethereum and Solana. Meanwhile, the firm’s state-regulated banking arm received a limited purpose Federal Reserve master account.

Nasdaq first filed with the U.S. Securities and Exchange Commission to launched tokenized equities back in September, as The Defiant reported.