Nasdaq Ventures, the venture capital arm of Nasdaq, will invest $100 million in Payward, the parent company of crypto exchange Kraken, to support its tokenized-equity program.

The companies are targeting the second quarter of 2027 for the launch of Nasdaq Equity Tokens (NETs), blockchain-based representations of publicly traded securities. The investment is intended to help build the infrastructure needed to distribute and trade the tokenized equities.

Nasdaq’s strategy is based on the possibility that blockchain networks could become part of the infrastructure supporting public-market assets. The investment also deepens the relationship between a traditional market-infrastructure provider and one of the cryptocurrency sector’s largest trading platforms.

The planned launch will depend not only on the token technology but also on the systems used to distribute the assets, monitor trading activity and define the rights attached to each product. Those areas will be important indicators of how the project develops before its targeted 2027 rollout.

Nasdaq expands tokenized-equity partnership

Nasdaq Equity Tokens are representations of publicly traded securities implemented on blockchain networks. The planned launch follows an earlier agreement to test the tokens. The next phase will focus on developing the infrastructure required to distribute and sell the assets, as well as researching market-surveillance technology for the new trading system.

The partnership places a traditional exchange operator more directly within the blockchain-based financial system. Nasdaq is seeking to help develop a market structure in which stocks could be traded on blockchain networks alongside existing financial systems.

Nasdaq described its broader tokenized-equities strategy in its official announcement.

Kraken expands beyond cryptocurrency

The agreement comes as Payward moves Kraken toward a broader multi-asset trading platform. The company plans to expand into stocks, derivatives and other traditional financial products while continuing its cryptocurrency business.

As part of the arrangement, Payward will implement Nasdaq’s market-surveillance technology across its trading venues. The technology will cover cryptocurrency and tokenized-equity markets, along with other asset classes connected to the company’s broader trading operations.

The initiative also raises questions beyond the technical process of placing an asset on a blockchain. Not every token necessarily represents an underlying asset, and the structure of each token and the rights attached to it are important considerations for the market.

Questions over tokenized-stock rights

A recent dispute involving Robinhood and AMC highlighted the debate over tokenized stocks. AMC said tokenized versions of its shares could provide economic exposure without granting actual shareholder rights. Robinhood, meanwhile, said it had the ability to create and offer financial products referencing publicly traded stocks.

That dispute adds another issue to the Nasdaq-Payward project. The central questions are not only whether stocks can be represented on blockchain platforms, but also how tokenized products will connect to trading venues, comply with regulation and address investor rights. Progress on those issues, together with the development of the distribution and surveillance systems, will shape the project’s path toward the targeted launch date.

Original source: CryptoNinjas.