Wall Street and crypto have been circling each other for years. On Monday, they shook hands.

 

Nasdaq and Kraken's parent company Payward announced a partnership to develop what they're calling an equities transformation gateway, a piece of infrastructure designed to let tokenized versions of publicly listed stocks move between the traditional, regulated financial system and the open, permissionless world of decentralized finance. The deal is one of the most significant convergences between a legacy exchange operator and a major crypto platform the industry has seen, and it arrives at a moment when several of the world's biggest exchanges appear to be racing to plant flags in the tokenized securities space.

 

Nasdaq President Tal Cohen said the exchange believes tokenization "has the potential to unlock the benefits of an always-on financial ecosystem" and to improve how investors access markets and how issuers engage with shareholders. The equity token design, which Nasdaq expects to become operational in the first half of 2027, is designed to preserve issuer control, existing regulatory frameworks, and the underlying rights associated with company shares.

 

 

What's Actually Being Built

Nasdaq's equity token design is not just about putting a blockchain wrapper around a stock. The initiative is structured so that blockchain records are integrated directly into the issuer's official share register, meaning a transfer of the token represents an actual transfer of the underlying security itself. Full legal and regulatory equivalence is the goal, not a synthetic approximation of it.

 

Kraken's xStocks framework powers the permissionless side of that equation. Since launching less than a year ago, xStocks has processed more than $25 billion in total transaction volume, with over $4 billion of that settled directly on-chain. More than 85,000 unique holders across supported networks have used the product, which currently covers more than 70 tokenized equities and ETFs, each backed 1:1 by the underlying asset. Fractional shares are available from $1. Trading runs around the clock on-chain, and dividends flow back automatically as additional tokens.

 

Under the partnership, the equities transformation gateway will allow clients in eligible jurisdictions to swap tokenized equities between the regulated, permissioned Nasdaq environment and the permissionless DeFi ecosystem. Payward Services will handle KYC and AML onboarding for participants accessing the gateway. Kraken will serve as the primary settlement layer for Nasdaq equity token transactions for an initial period, in the markets where xStocks are available.

 

It's worth being precise about geography. xStocks are not registered under the U.S. Securities Act and are not available to U.S. persons or in the United Kingdom. The initial rollout targets Europe and other international markets where Payward holds the relevant registrations and licenses.

 

 

The Regulatory Foundation Is Already Laid

None of this is happening in a vacuum. Nasdaq filed a proposal with the SEC in September 2025 that sought to allow tokenized versions of its listed stocks and ETFs to trade alongside traditional shares and settle through the Depository Trust and Clearing Corporation. That proposal argued for working within existing rules rather than around them, a notable contrast to tokenization projects that have tried to carve out space outside traditional regulatory structures.

 

The regulatory environment has also shifted meaningfully. The SEC's 2026 Staff Statement on Tokenized Securities classifies tokenized equities the same as regular equity securities under federal law, giving the Nasdaq initiative a cleaner legal runway than it might have had even a year ago. SEC Chairman Paul Atkins has been publicly supportive of American leadership in digital financial technology, and the commission has asked staff to work with firms on tokenized securities distribution.

 

Nasdaq's equity token design is set up as an issuer-sponsored, voluntary program. Public companies listed on Nasdaq would be able to opt in as the framework develops. The exchange plans to engage issuers, transfer agents, regulators, and market infrastructure providers as the project evolves.

 

 

Kraken's Vertical Integration Play

For Kraken, the Nasdaq partnership is the latest move in what looks increasingly like a deliberate strategy to own the entire tokenized equity stack. In December 2025 the company acquired Backed Finance, the Swiss issuer that sits behind the xStocks product, deepening its vertical integration along the tokenization value chain. In February of this year it expanded xStocks to the 360X platform operated by Deutsche Boerse Group. And in late 2025 Kraken launched what it described as the world's first regulated tokenized equity perpetual futures, offering up to 20x leverage for non-U.S. clients across more than 110 countries.

 

Kraken also became the first crypto company to secure approval for a Federal Reserve master account, a regulatory win that drew criticism from several U.S. banking groups but also marked a genuine shift in how regulators are thinking about the boundary between crypto platforms and the traditional banking system. The company is separately targeting a public listing in 2026.

 

Arjun Sethi, Kraken's Co-CEO, framed the Nasdaq deal in terms of capital efficiency as much as access. His argument is that equities today sit largely frozen inside brokerage systems where their utility is limited to directional exposure and, in some cases, venue-specific margin. Tokenized equities on programmable infrastructure, he suggested, can function as collateral across a much broader set of trading, lending, and hedging environments simultaneously, without the capital fragmentation that comes when each venue requires isolated collateral deposits.

 

"When collateral can move programmatically between systems," Sethi said, "settlement friction decreases and capital can move more dynamically between strategies and markets."

 

 

The Race Is On

The Nasdaq-Kraken announcement does not exist in isolation. It arrived in a week that saw the Intercontinental Exchange, the parent company of the New York Stock Exchange, make a strategic investment in OKX at a reported $25 billion valuation, signing a deal to bring tokenized NYSE-listed stocks and crypto futures to OKX's platform. ICE separately announced development of a new digital trading platform combining the NYSE's Pillar matching engine with blockchain-based post-trade systems. That platform would support 24/7 trading of U.S.-listed equities and ETFs, instant settlement via tokenized capital, and stablecoin-based funding. ICE said it would seek regulatory approvals for the venue, with NYSE-linked tokenized shares targeting availability in the second quarter of 2026.

 

Nasdaq also separately announced a partnership with Seturion, the tokenized settlement platform operated by Boerse Stuttgart Group, to connect its European trading venues to infrastructure supporting trading and settlement of tokenized securities.

 

What's emerging is something that looked improbable even two years ago: a genuine competition among the world's largest exchange operators over who gets to own the infrastructure layer for tokenized securities. The race is less about whether tokenized equities will happen and more about which institutions get to control the plumbing.

 

If the Nasdaq-Kraken infrastructure reaches full operation, the implications for how capital markets function could be substantial. Tokenized equities with 24/7 on-chain settlement would, in theory, compress the settlement cycle that still takes two business days in conventional U.S. equity markets. Shareholders would retain full governance rights, including proxy voting and dividend entitlements, automated through smart contract logic rather than managed through layers of intermediaries.

 

For international retail investors in markets where traditional brokerage distribution is limited or expensive, access to tokenized U.S. equities through a crypto exchange represents a potentially meaningful expansion of the investable universe. Fractional share availability starting at $1 removes one of the practical barriers that has kept some investors out of high-priced stocks.

 

The more speculative scenario, and the one Sethi seems most interested in, is what happens when tokenized equities can be used as collateral across DeFi lending protocols, perpetual futures markets, and other on-chain financial applications. The argument is that programmable collateral is more efficient than static collateral, and that the firms which build the infrastructure to move it across venues will capture a meaningful slice of the value created.

 

There's obviously a long way to go. The Nasdaq equity token design isn't expected to be operational until mid-2027. Regulatory approvals still need to be worked through. Issuer adoption is voluntary and therefore uncertain. The U.S. market itself remains off-limits for xStocks. And building genuine liquidity in tokenized equity markets, as Sethi himself acknowledged, requires more than technology alone.

 

Still, the direction of travel is increasingly clear. The question is no longer whether traditional exchange operators will engage with blockchain-based infrastructure. It's who gets there first, and whose plumbing ends up underneath everyone else's trades.