London Stock Exchange and Kraken Tokenize UK Stocks

The London Stock Exchange (LSE) has agreed with Kraken's parent company, Payward, to launch trading in tokenized UK stocks. The Financial Times reported the deal on Tuesday, citing Payward's chief commercial officer, Mark Greenberg. The first tokens will appear on the exchange's new overnight venue as early as 2027. The deal is another sign that traditional financial institutions are ready to move part of their business onto a blockchain, despite the slow pace of crypto regulation in Britain.

What exactly did LSE and Payward agree on?

According to Greenberg, the tokens will track the value of leading UK stocks and trade on LSE 24, the exchange's new overnight venue. LSE announced the project on July 21. It covers trading five days a week, Monday through Friday, without the usual hourly limits of a classic exchange.

For LSE, the move is an attempt to stop losing trading volume to Asian and American investors who want to buy UK companies outside London business hours. The launch of tokenized products marks the venue's first step toward digital assets. Earlier attempts to move stocks onto a blockchain existed before, but mostly stayed niche products without backing from major venues.

How does stock tokenization actually work?

A tokenized stock is not the security itself but a blockchain record that tracks its market price. The token holder does not own the stock directly. An issuer, such as Payward's Backed unit, holds the underlying asset in custody and issues a token pegged to its value.

Unlike ordinary crypto assets, these tokens are usually issued as a regulated product with mandatory identity checks on the buyer. Exiting a position also goes through the issuing platform rather than directly on-chain.

Tokenized stocks are convenient for investors outside Britain too. There is no need to open an account with a local broker or wait days for a bank transfer. But the whole structure rests on trust in the issuer. If a unit like Backed runs into financial trouble, token holders carry the same risk as holders of any ordinary debt instrument tied to that issuer.

• Fractional ownership: buyers can purchase a slice of a token instead of a whole share, lowering the entry threshold for small investors.
• Trading runs nearly around the clock, five days a week, instead of only during classic exchange hours.
• Settlement happens on-chain within minutes, skipping the traditional T+1 or T+2 clearing cycle.
• Custody of the underlying asset sits with the token issuer, not with the holder.
• The token can be used as collateral in DeFi protocols, something an ordinary paper share cannot do.

Why are traditional exchanges racing into tokenization one after another?

LSE is far from the first traditional exchange experimenting with tokenized stocks. In August, Nasdaq agreed to acquire LeveL Markets, the third-largest alternative trading system in the US by volume, as part of its own push toward round-the-clock markets.

Crypto exchanges already tried offering tokenized stocks back in 2021, but German and British regulators forced them to wind the products down. Traditional exchanges are now attempting the same thing, only within licensed structures, which lowers the risk of another ban.

Back in March, Nasdaq launched a joint gateway with Payward and its Backed unit, the issuer behind the xStocks tokens, to turn stocks into digital assets. That step built on the tokenization proposal Nasdaq filed with US regulators in September 2025. Separately, Intercontinental Exchange, the parent of the New York Stock Exchange, invested in crypto exchange OKX to bring tokenized NYSE stocks onto that platform starting in the second quarter of 2026.

In April, Deutsche Börse put $200 million into Payward, expanding its own access to tokenized securities. CME Group launched futures on Cardano, Chainlink and Stellar back in January, then added Avalanche and Sui contracts in May. Competition for younger investors used to round-the-clock crypto markets is pushing exchange after exchange to copy the model. Stock tokenization is just one piece of the broader real-world asset (RWA) tokenization trend, which also covers bonds, real estate and money-market funds. That segment of the crypto industry is drawing the most interest from traditional banks and exchanges in 2026.

How big has the tokenized stock market grown?

According to data provider RWA.xyz, the tokenized stock market is growing fast despite caution from some traditional investors toward crypto assets.

A 153% jump in token holders in a single month suggests demand is coming not just from big funds but also from retail investors who previously had no direct access to UK blue chips.

What does this mean for markets and investors?

For an ordinary trader, stock tokenization means wider access to well-known UK companies without opening a brokerage account in London. Custody, taxation and investor protection questions around buying a token instead of the actual share still remain open in most jurisdictions.

The UK's FCA has not publicly commented on the LSE and Payward deal so far. But its past record of banning retail crypto derivatives in 2021 suggests the regulator tends to restrict ordinary customers' access to new complex instruments before easing those limits.

The news landed on a day when Bitcoin held near $78,000 and Ethereum traded around $2,438, with both assets staying relatively steady after August's volatility. Growing interest from classic exchanges in blockchain keeps blurring the line between traditional markets and crypto. For Kurslog, that means more overlap between stocks and digital assets: the wider banks and exchanges embrace tokenization, the more natural converting between traditional money and crypto starts to look.