London Stock Exchange Joins Forces With Kraken Parent to Explore Tokenised UK Stocks

The London Stock Exchange (LSE) is working with Payward, the parent company of Kraken, to tokenise the stocks of the 100 largest London-listed firms using the xStocks tokenisation protocol, paving the way for trading of the products via the stock exchange's proposed 24/7 platform. Payward and the LSE announced on Tuesday that the first batch of UK stocks will go live as xStocks in the next few weeks, building upon an existing tokenised stocks platform that has processed over $40 billion (roughly Rs. 3,79,680 crore) in trading volume to date. Of that volume, about $20 billion (roughly Rs. 1,89,840 crore) has settled onchain, with over 200,000 holders across the product lines.

 LSE 24 Could Eventually Include Tokenised Stocks From Multiple Global Markets

As per the release by Businesswire, under the agreement, shares from the top 100 companies on the LSE will become available via Payward's xStocks platform. An xStock is backed 1:1 by the underlying security itself. The crypto products, which are blockchain-based, can be traded 24/7 on selected centralised exchanges, stored in self-custody wallets, and interfaced with on-chain apps. The planned roll-out in London will enable eligible investors from more than 110 nations to invest in tokenised stocks of UK-listed firms. The xStocks are currently unavailable to investors residing in the UK.

The partnership goes well beyond distribution of tokenised shares of London-listed companies using Payward's established channels. Subject to regulatory clearance, the LSE intends to list xStocks and facilitate their trading at LSE 24, the newly launched 24-hour venue for trading. The platform is expected to gradually encompass tokenised stocks of the US, EU, UK and Hong Kong, among others. The stock exchange had already made preparations to open up beyond regular London trading hours.

CEO of LSE, Julia Hoggett, explained that retail traders have been demonstrating interest in capitalising on the time difference and exposing themselves to the assets of not only the UK but also international ones, and now, with the new deal with Payward, tokenised securities will join the list of instruments available for trading during off-exchange sessions. 

Arjun Sethi, Payward co-CEO, explained that the solution is the convergence of regulated financial markets and blockchain technology. “For years, the assumption was that crypto and traditional finance were on a collision course, and one of them would have to lose. That was never the real story,” Sethi said.

As per an estimate by the government-backed Industry Taskforce on FinTech in July, the UK could generate up to 33 billion British pounds, or $44 billion (roughly Rs. 4,17,648 crore), in annual output by 2035 by pioneering tokenised financial markets. This report, which is the result of collaboration with a task force within the industry, outlines a 12-month project to test the use of blockchain for a financial transaction involving securities.