Payward, the parent of the Kraken crypto exchange and owner of xStocks, has inked a deal with Dubai’s GTN to tokenize international stocks, starting with those in Hong Kong. Other planned jurisdictions for the underlying stocks include the UK, Europe and South Korea, alongside other asset classes. Subject to regulatory approval, Payward also aims to distribute xStocks to GTN’s institutional clients.
xStocks has reached over $35 billion in transaction volume according to Payward, and has amassed nearly 200,000 holders across the world. xStocks are not equities but open ended tracker certificates issued by a Jersey vehicle under Swiss ledger based securities law. The structured note holders have a secured claim over a pledged collateral account rather than ownership of the shares. By issuing structured products, xStocks and its competitors allow these tokens to circulate via DeFi. Like stablecoins, KYC is only performed at the on and off ramps.
For US stocks, Alpaca is the API-led broker buying and selling the underlying stocks and keeping them in custody. This desire to launch international stocks is one of the reasons why Alpaca is expanding by recently acquiring a similar API-driven European firm and raising $135 million in funding. In the deal announced today, GTN will perform a similar role to Alpaca, by providing trading and custody for international stocks. It has licenses in the US, UK, Dubai (DFSA/DIFC), Hong Kong, Singapore and South Africa and accesses 90 trading markets globally, including in Europe. However, expanding beyond US equities introduces frictions that do not apply to Nasdaq and NYSE listed names.
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