What to know:
- Payward and GTN plan to launch Hong Kong tokenized stocks, pending regulatory approval.
- xStocks supports 500+ securities, with over $35 billion in volume and 200,000 holders.
- Payward may later add UK, European, and South Korean equities to the xStocks platform.
Kraken parent Payward is expanding its tokenized stocks business beyond US companies. The firm plans to add Hong Kong-listed shares through GTN. The agreement could later cover British, European, and South Korean equities as well.
According to the announcement, Payward developed the xStocks framework and confirmed the partnership with investment infrastructure provider GTN. The initial expansion will introduce shares listed in Hong Kong. Every planned market launch remains subject to the required regulatory approvals.
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How Payward Plans to Expand xStocks Beyond Equities
However, the organizations might consider expanding the xStocks project beyond traditional equities in the future to include other tokenized asset classes.
Payward said that the deal sets up the infrastructure for such an expansion, while neither the organization nor its partner specified what type of assets might be added to the platform.
Mark Greenberg, global head of Payward Services, called international markets the largest untokenized asset class. The company wants to bring all global capital markets on chain in a piecemeal manner.
More competition is emerging in the area of tokenized stocks between cryptocurrency firms and traditional financial players. Robinhood recently expanded its stock token offerings to non-European users. In addition, Coinbase also intends to offer stock tokens.
Several US major stock markets are working on the creation of their own tokenization systems. The Depository Trust & Clearing Corporation (DTCC) is conducting the tests of the infrastructure for blockchain securities.
Why Overseas Tokenized Stocks Are Attracting Investors
Supporters of tokenization see the opportunity for quicker settlement and 24/7 trade execution, while blockchain networks will help facilitate efficient asset transfers.
According to Citi, the value of tokenized securities might be around $5.5 trillion by 2030, including tokenized equities worth $2.6 trillion.
Tokenized equity products on existing platforms usually include tokenized stocks tied to the US. These products typically represent companies like Nvidia, Apple, or Tesla.
An addition of foreign equities will expand the availability of tokenized stocks representing Asian companies from the artificial intelligence supply chain.
Global retail traders have shown interest in those Asian companies. Expansion by Payward will allow eligible investors to access these companies via blockchain-based products, which would require approval for each product in the market where it becomes available.
Last year, the xStocks platform was introduced with tokenized stocks from the US and exchange-traded funds.
Payward said that the platform currently offers more than 500 securities and completed over $35 billion in volume. Almost 200,000 holders were reported, but US investors are unable to use the platform.
What GTN Brings to the Global xStocks Expansion
GTN has access to over 90 markets in the world. Execution, custody, and record keeping will be carried out by GTN for the securities underlying tokenized stocks. Upon approval, GTN will offer products of xStocks to its institutional clients.
This collaboration takes place during discussions about the issuance of tokenized stocks. In xStock’s case, tokenized stocks are based on third-party issuers buying and holding stocks to tokenize them. Others support native blockchain issuance because it could remove intermediaries.
Regulators and market infrastructures pay more attention to this problem. Scrutiny is increasing as blockchain securities move toward mainstream finance. Approval will define when Payward and GTN will be able to enter markets or add asset classes.
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