Nasdaq announced on Monday that it will collaborate with Payward, the parent company of cryptocurrency exchange Kraken, to develop a tokenization infrastructure aimed at capitalizing on the growing interest in blockchain-based equities.

Tokenization is the process of turning financial assets – such as bank deposits, stocks, bonds, funds and real estate – into crypto assets that can be traded on blockchains, the ledgers underpinning digital assets.

* In September, the exchange operator sought approval from the Securities and Exchange Commission to allow trading “either in traditional digital or tokenized form”.

* Institutional adoption of digital asset infrastructure has advanced since the passage of the GENIUS Act last year, with further regulation still being debated.

* In January, NYSE parent Intercontinental Exchange said it was seeking regulatory approval for a blockchain-based platform to enable 24/7 trading and on-chain settlement of tokenized securities.

* Robinhood, Gemini and Kraken have already launched tokenized stocks in Europe, while Coinbase and startup Dinari are seeking approval for similar products in the US.

* However, with bitcoin hovering around levels seen before Donald Trump’s 2024 presidential election victory, investors continue to be divided over the cryptocurrency’s role in portfolios.

* Under the partnership, Nasdaq will use Payword’s xStocks, a tokenization platform, to enable customers to move securities from institutional trading infrastructure to blockchain networks.

* Separately, Nasdaq also announced a partnership with German exchange operator Boers Stuttgart’s tokenization settlement platform to facilitate blockchain-based equity trading across Europe.

* Nasdaq said plans to tokenize stocks and other exchange-traded products will focus on corporate actions, proxy voting and shareholder engagement.

“Tokenization has the potential to unlock the benefits of the ever-present financial ecosystem — enhancing how investors access markets, how issuers connect with shareholders,” said Nasdaq President Tal Cohen.