London Stock Exchange partners with Kraken parent to tokenize FTSE 100 stocks on blockchain
The London Stock Exchange Group (LSEG) has partnered with Payward, parent of crypto exchange Kraken, to tokenize FTSE 100 stocks as xStocks—1:1-backed digital tokens trading 24/7. The product, issued by Backed Assets (JE) Limited, has already processed $40 billion in volume with nearly $20 billion settled onchain to over 200,000 holders. UK residents are excluded as the tokens are classified as offshore unregulated instruments. The initiative aims to modernize market infrastructure and compete with New York.
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Cross-source coverage
Common ground
- The LSE's tokenized FTSE 100 product is a commercial product, not a pilot, given its $40 billion volume and 200,000 holders.
- The exclusion of UK retail investors from the tokenized product is a regulatory failure by the FCA, not a product flaw.
- Tokenization offers genuine efficiency gains, like settlement in seconds instead of T+2, which benefits investors.
- The EU's DLT Pilot Regime poses a real competitive threat to the LSE, as Frankfurt and Paris could attract tokenized securities business.
- Unregulated offshore platforms already offer synthetic FTSE 100 exposure with no protections, making the Bermuda structure a marginally better alternative.
Points of contention
- Whether the product is a 'bridge' for non-UK investors or a 'loophole' that strips protections and undermines trust.
- Whether the LSE could issue full-rights tokens under the FCA's sandbox but chooses not to, or if the FCA's rules prevent it.
- Whether the stripped voting rights are a cost-cutting measure or a necessary response to regulatory constraints.
- Whether the product represents 'pragmatic survival' or a 'race to the bottom' that dilutes the FTSE 100 brand.
Blind spots
- Both sides overlook the potential for a global standard on tokenized securities, which could resolve rights fragmentation.
- The debate assumes tokenization must strip rights, ignoring that full-rights tokens are technically possible and already regulated in the EU.
- Neither side fully addresses how the LSE's move might force the FCA to modernize, or whether that's even likely.
WorldAttention’s read
The LSE's tokenized FTSE 100 product is a pragmatic but imperfect response to a regulatory vacuum, offering non-UK investors faster settlement and access to blue-chip stocks they couldn't buy before, but at the cost of stripped voting rights and UK retail exclusion. While the neutral agent sees it as a defensive move against worse unregulated alternatives, the western agent argues it's a deliberate regulatory arbitrage that erodes trust in British corporate governance. Both agree the FCA's inaction is the root problem, and the real test is whether regulators can agree on a global standard for full-rights tokenization within five years—otherwise, fragmented systems and a race to the bottom will follow.
Wire timeline
Kraken Parent to Launch Tokenized FTSE 100 Stocks, Excluding UK Investors
Payward, the parent company of Kraken, is set to launch tokenized versions of London's top 100 stocks (the FTSE 100) within weeks, in partnership with the London Stock Exchange Group (LSEG). The tokens, called xStocks, will be issued by Backed Assets (JE) Limited, a Jersey company, and will offer price exposure and 24/7 transferability to investors in over 110 countries. However, UK residents are excluded from participation. Crucially, holders of these tokenized stocks will not receive shareholder rights such as voting or the ability to claim the underlying shares. The article notes that the total market for tokenized stocks is currently small ($2.5 billion) compared to the FTSE 100's $3.47 trillion valuation. LSEG's own plans for a 24/5 trading venue, LSE 24, are still in testing, with tokenized equities not expected until after 2027. Payward has a similar agreement with Nasdaq.
London Stock Exchange Partners with Kraken to Tokenize UK Blue-Chip Stocks on Blockchain
The London Stock Exchange (LSEG) has announced a partnership with cryptocurrency exchange Kraken to place shares of the United Kingdom's 100 largest publicly traded companies on blockchain rails. The tokenized stocks will be made available through Kraken's xStocks framework, which has already generated over $40 billion in total trading volume. Each tokenized stock will be a one-to-one-backed digital representation of the underlying share, enabling 24/7 trading via self-custody wallets. The initiative aims to offer greater liquidity and flexibility compared to traditional equities. London joins several other stock exchanges exploring tokenization of equities, bonds, and commodities. The plan still requires regulatory approval, which the exchange anticipates receiving shortly. LSEG stock has declined 4% over the past year in London trading. The move reflects growing institutional interest in blockchain-based financial instruments and tokenized assets as potential collateral.
London Stock Exchange to tokenize FTSE 100 stocks onchain with Kraken parent Payward
The London Stock Exchange (LSE) will put its 100 biggest stocks, the FTSE 100, onchain as xStocks, tokens backed 1:1 by real shares that trade 24/7 on exchanges and in self-custody wallets across 110+ countries. The product is created by Kraken's parent company Payward and issued by Backed Assets (JE) Limited, a Jersey company, offered to Kraken clients via Payward Digital Solutions Ltd, licensed in Bermuda. Notably, UK residents cannot yet buy these tokens as they are classified as offshore unregulated instruments by the FCA. xStocks has already processed $40bn in volume over just over a year with nearly $20bn settled onchain to over 200,000 holders. The LSE plans to list them on LSE 24, its new 24-hour venue, and will explore shares issued natively onchain with the same rights as traditional stock. This contrasts with the US approach where the SEC cleared DTCC to tokenize assets but keeps tokens inside a vault, while the LSE version puts the token in the user's wallet. The move represents a bid by London to compete with New York for listings by innovating on market plumbing.
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Kraken parent Payward partners with London Stock Exchange on tokenized stocks
Payward, the parent company of the cryptocurrency exchange Kraken, has announced a partnership with the London Stock Exchange (LSE) to develop tokenized stocks. This collaboration aims to bridge traditional finance and blockchain technology by enabling the trading of tokenized securities on the LSE's infrastructure. The initiative represents a significant step for institutional adoption of digital assets, leveraging Kraken's expertise in crypto markets and the LSE's established regulatory framework. The partnership focuses on creating a compliant and efficient market for tokenized equities, potentially offering faster settlement and fractional ownership. No specific timeline or financial details were disclosed in the announcement.
London Stock Exchange plans to launch tokenized stocks backed by listed companies
The London Stock Exchange (LSE) has announced plans to launch tokenized stocks, which will be backed by companies listed on the exchange. This move represents the LSE's latest effort to embrace digital assets and blockchain technology in traditional financial markets. The tokenized stocks would allow for more efficient trading and settlement processes, potentially increasing liquidity and accessibility for investors. While specific details on the timeline and implementation have not been disclosed, the initiative signals a significant step by one of the world's oldest stock exchanges toward integrating digital asset infrastructure. The announcement comes amid growing institutional interest in tokenization of real-world assets, as major financial centers compete to establish frameworks for digital securities. The LSE's plan could pave the way for other traditional exchanges to explore similar offerings, potentially transforming how equities are traded and settled in the future.