Nasdaq bets big on tokenized stocks with $100 million investment in Kraken parent Payward

Nasdaq has significantly increased its stake in Payward, the parent company of Kraken, by investing $100 million. This investment will see Nasdaq and Payward collaborate on trading tokenized versions of stocks. The valuation of Kraken surged to $21 billion after the investment, according to Bloomberg. This development follows Nasdaq's previous work with Payward, where they developed Nasdaq Equity Tokens (NETs) and integrated them with Payward's xStocks ecosystem.

The Securities and Exchange Commission previously approved a rule change that allows certain securities to trade and settle in tokenized form. Nasdaq president Tal Cohen mentioned that the next era of market evolution will be characterized by efficient and seamless capital and asset movement across the financial system with durable liquidity.

Payward will utilize Nasdaq's market surveillance tools across its trading platforms to monitor potential manipulation and trading abuses. Tokenized stocks have gained popularity among Wall Street investors due to their ability to be held in digital wallets, transferred directly between users, and traded 24/7. The market capitalization of tokenized stocks grew 400% over the past year to $1.7 billion in June, with an a16z crypto report estimating it to be above $2 billion.

Several major players in both crypto and traditional finance have recently entered the tokenized equities market. In January, the New York Stock Exchange owner, Intercontinental Exchange, announced plans for a platform for tokenized securities trading and on-chain settlement. Securitize partnered with NYSE on blockchain-native shares, while Dinari offers eligible U.S. investors tokens backed by stocks and ETFs.

Robinhood also launched a blockchain-based stock token product in more than 120 countries, though it remains unavailable in the U.S. due to regulatory scrutiny. The announcement is part of a larger debate on whether tokenized stocks provide genuine ownership or merely exposure to a share price. AMC Entertainment recently accused Robinhood of creating an unauthorized market imitating trading in AMC shares through its overseas platform without the company's approval, a claim Robinhood defended.