Nasdaq-Backed Payward Launches Tokenized Versions of European Stocks — Update

By Joe StonorNasdaq-backed Payward launched tokenized versions of more than 200 of the most-traded U.K. and European stocks, the latest in a stream of crypto companies looking to bridge traditional and decentralized finance.Blue-chip stocks such as Siemens, Shell and LVMH are among the companies that investors can trade 24/7 as digital tokens, and all stocks on both London's FTSE 100 and the German DAX are among those that will be tokenized, Payward said.Tokenization is the conversion of real-world assets into digital tokens that can be traded on the blockchain, the system that underpins cryptocurrencies. Investors will be able to trade the stocks on the Payward-owned Kraken platform from Wednesday, as well as other exchanges, according to the company.More than 200 U.K. and European stocks will be available under the xStocks brand name, Payward said. The company said in Europe it doesn't need the consent of the underlying issuers to tokenize their stocks.While Europe and other regions worldwide allow the trading of tokenized equities, regulators in the U.S. and the U.K. are still weighing their options.Blockchain-based versions of traditional stocks are growing fast in popularity. In September, the Securities and Exchange Commission created a path for trading venues to offer these stocks in the U.S. The regulator can grant exemptions to allow platforms to trade digital tokens, but it gives corporate issuers the chance to block tokenized versions.Still, the SEC's move prompted both traditional and crypto-native exchanges to accelerate plans to develop the technology. Last month, OKXICE, a 50-50 joint venture between New York Stock Exchange owner Intercontinental Exchange and crypto exchange OKX, told the SEC it plans to launch a tokenized trading platform using the regulator's framework.Payward, which received a $100 million investment from Nasdaq Ventures in September, already launched tokenized versions of U.S. stocks last year, although they weren't available to trade in the U.S. at the time.Separate to its latest announcement, Payward is working with both the Nasdaq and the London Stock Exchange to advance the established bourses' stock tokenization efforts.Trading volumes in tokenized stocks are dwarfed by volumes in main markets. However, uptake is growing, Payward said, with all-time transaction volume in the company's tokenized U.S. stocks and exchange-traded funds at around $45 billion.By way of comparison, the Nasdaq alone handles a daily average trading volume of more than $300 billion in U.S. equities.Tokenized equity issuance hasn't been without controversy. J.P. Morgan, AMD and Coca-Cola are among the U.S. companies to opt out of the SEC's plans. Meanwhile, companies, including Nasdaq, have raised concerns that tokenized stock trading would create a parallel market outside the U.S. National Market System, and that dual markets would likely prompt investor confusion.But Payward's chief commercial officer, Mark Greenberg, said he was optimistic that corporations will ultimately come around. Greater investor access to companies' shares ought to be a good thing for everybody, he said.Payward plans to tokenize every other international market, Greenberg said. "We are building toward a single global market where any listed company can be held by any investor, whatever their address, their currency, or their local broker."Digital tokens representing U.K. and European stocks are already available via some smaller crypto platforms, but Payward is the largest and best-established provider to date. Fintech GTN will handle custody of underlying assets.The London Stock Exchange declined to comment while Deutsche Boerse, which is also partnered with Payward, said it welcomed the tokenization."Our partnership with Payward is exactly the kind of collaboration that accelerates the transformation of capital markets," said Carlo Koelzer, the Frankfurt exchange's head of digital assets.Write to Joe Stonor at [email protected]