Money Market Funds Are Becoming Crypto Trading Collateral
Nasdaq is investing $100 million in Payward, the parent company of Kraken, as the two groups build infrastructure for tokenised equities.
The investment announced on 10 September puts capital from one of the world’s largest stock-market operators behind a product category that crypto platforms spent several years developing outside conventional exchanges. Payward’s xStocks already covers more than 500 tokenised securities and has recorded over $35 billion in transaction volume. Nearly 200,000 investors hold the products.
Those numbers grew quickly. In March, Payward reported more than $25 billion of total xStocks transaction volume, including over $4 billion settled on-chain, across more than 85,000 holders. By July, cumulative volume had passed $35 billion and the holder count had more than doubled.
Nasdaq now wants part of the infrastructure behind those trades. The company began working with Payward in March on an Equities Transformation Gateway designed to connect regulated equity markets with blockchain networks. Nasdaq plans issuer-sponsored equity tokens that retain the regulatory treatment, governance rights and market protections attached to the underlying shares. Payward supplies the infrastructure connecting those securities with blockchain markets in jurisdictions where the products operate.
The $100 million investment turns the relationship into more than a technology experiment. London has reached a similar conclusion from another direction. The London Stock Exchange announced on 1 September that it will work with Payward on tokenised UK equities. Payward plans to issue xStocks representing the 100 largest companies listed in London in the coming weeks. LSEG is also assessing structures in which the token represents the equity itself while preserving shareholder rights and governance.
Its planned LSE 24 venue is due to launch in 2027, subject to regulatory approval.
Traditional exchanges built their business around scheduled trading sessions, central securities depositories, brokers, clearing houses and settlement systems. Crypto markets trained another group of investors to expect assets that move between wallets at any hour.
Tokenised equities bring those systems into the same trade. A Tesla xStock already gives an eligible investor outside the United States tokenised exposure to Tesla. Payward says its xStocks have 1:1 backing through the underlying assets. Investors transfer the token through supported blockchain networks rather than keeping every transaction inside a conventional brokerage account.
Ownership rights depend on the product structure, however, and the difference has already produced conflict. AMC chief executive Adam Aron criticised Robinhood this month for offering tokenised exposure to AMC shares without the company’s involvement. Robinhood’s tokens do not give holders ordinary ownership of AMC stock. They operate as debt securities linked to the shares. Token holders therefore do not become shareholders merely because the product tracks a listed company.
Robinhood chief executive Vlad Tenev defended the structure, arguing that a listed company does not control every financial product that references its stock.
The dispute exposes the terminology problem inside tokenised equities. Two products both called a tokenised stock do not necessarily give the holder the same legal asset.
One structure represents a contractual claim against an issuer that tracks a share price. Another holds conventional shares and issues tokens against them. A third places the security itself on blockchain infrastructure and preserves the legal rights attached to direct ownership.
Nasdaq and LSEG are working towards the third category. The World Federation of Exchanges has spent more than a year warning regulators not to treat the first two categories as substitutes for ordinary shares without explaining the difference. The industry group has described some third-party stock tokens as equity “mimics” because investors do not necessarily receive voting rights, dividends or a direct legal claim on the underlying company.
Its concerns reach into market structure. Suppose the conventional Tesla share trades on Nasdaq while versions of Tesla exposure trade around the clock across several blockchain networks. Prices have to remain aligned despite different trading hours, liquidity pools and legal instruments. Market makers perform part of that work through arbitrage. Thin liquidity or a break between the token and its underlying asset leaves room for prices to separate.
Corporate actions add more machinery. Public companies pay dividends, split shares, launch rights issues, merge, spin off businesses and ask shareholders to vote. A token that genuinely represents the share needs infrastructure for each event. Recording a price on a blockchain solves none of them on its own.
Nasdaq and LSEG already operate systems built around those obligations. Crypto platforms bring something the exchanges want in return: global distribution and an investor base accustomed to holding assets directly through digital wallets.
Payward has already started widening xStocks beyond U.S. securities. It announced in July that the framework was moving into Hong Kong-listed shares before expanding towards the UK, European Union and South Korea. Franklin Templeton has separately agreed to work with Payward on tokenising seven of its ETFs.
The product is also moving into institutional trading. Kraken has added xStocks to its OTC operation, where eligible institutional clients trade tokenised U.S. equities outside conventional market hours through bilateral execution.
Twenty-four-hour access changes more than convenience. A European investor receiving company news after the U.S. closing bell normally waits for pre-market trading or the next session, depending on the brokerage and instrument. A tokenised market keeps producing prices. An investor in Asia operates during local business hours without waiting for New York to wake up.
Continuous markets also require liquidity at hours when the underlying exchange has little or no price discovery taking place. A token trading at 03:00 in New York therefore depends on market makers, derivatives and other reference markets to establish what the underlying stock is worth before Nasdaq opens. The token does not remove the closing bell from the underlying market merely by continuing to trade after it.
Settlement produces a different case. U.S. equities currently settle on a T+1 cycle. Blockchain transfers execute much faster at the technical level. Shorter settlement reduces the period in which counterparties wait for cash and securities to exchange, but securities markets do more during that period than move database entries. Brokers finance positions, clearing systems net trades, custodians reconcile holdings and intermediaries resolve failed transactions.
Replacing one-day settlement with near-instant transfer changes the funding model around the trade. An investor buying a token also needs cash on compatible rails. Stablecoins and tokenised deposits increasingly provide that leg, which explains why digital money and tokenised securities continue developing beside each other even though they solve different problems.
Nasdaq’s $100 million investment suggests stock exchanges no longer regard tokenised equities simply as crypto platforms wrapping listed shares and selling them overseas. Kraken built a product with more than $35 billion in cumulative transactions and close to 200,000 holders before the major exchanges had put their own versions into the market. Nasdaq and LSEG are now building the regulated version.
