- The London Stock Exchange has partnered with Payward, the parent company of Kraken.
- The 100 largest UK-listed companies are set to be issued as tokens under the xStocks framework.
- Trading is planned for LSE 24, the exchange’s 24-hour venue, from 2027.
- UK regulators currently treat offshore xStocks as unregulated instruments.
The London Stock Exchange announced on Monday that it will work with Payward, the parent company of crypto exchange Kraken, to build a UK tokenized equity structure and issue the FTSE 100 on-chain through Payward’s xStocks framework. The first London-listed xStocks are expected within weeks on Kraken and other platforms in the xStocks Alliance, well ahead of any exchange involvement. Separately, and subject to regulatory approval, the LSE intends to list those tokens on LSE 24 in 2027. The two firms will also examine wallet-based access, blockchain infrastructure, and how LSEG’s Digital Securities Depository could handle settlement and asset servicing. For an exchange group that has spent a decade watching listings migrate to New York, the announcement amounts to a decision to compete on distribution rather than on the IPO pipeline.
The token carries the dividend but leaves the vote behind
An xStock is backed one-to-one by the underlying share or ETF held through a regulated custody arrangement, so the holder receives the price exposure and the dividend economics without receiving the vote that normally travels with a share certificate. That single omission is where most of the regulatory objection to tokenized equities has concentrated, and it explains why the LSE has framed its own work as an attempt to preserve shareholder rights and governance standards rather than to replicate the offshore wrappers already trading elsewhere.
The framework itself is well past the pilot stage. Since launching a little over a year ago, xStocks has processed more than $40 billion in cumulative volume, roughly $20 billion of it settled directly on-chain, across more than 200,000 active holders in over 110 countries. Kraken built the issuance mechanics by acquiring Backed Finance, the tokenization infrastructure firm behind the original product, which is also how it arrived at this announcement holding something the LSE could not have built in the same timeframe.
Lagos and Manila are the customers London cannot reach through member firms
A retail investor in Nigeria, the Philippines or Brazil has almost no practical route into a UK brokerage account, and neither the broker nor the exchange has ever found it economic to build one for accounts of that size. Moving the access layer to a self-custody wallet removes the entire onboarding chain, which is why the LSE is willing to attach its brand to a crypto exchange operating in jurisdictions where it holds no membership relationships of its own.
The settlement argument runs alongside the distribution one. Traditional equity clearing operates in fixed windows and splits liquidity across venues, custodians and depositories that each hold collateral idle while a trade completes, whereas on-chain settlement compresses that cycle, strips out intermediary fees and keeps an order book alive after London closes. Whether the resulting liquidity is deep enough to price a FTSE 100 constituent at three in the morning is the question the 2027 launch will answer, and nobody involved is claiming to know yet.
UK retail investors, in the meantime, cannot buy xStocks at all. The tokens are issued through a Jersey entity, which is precisely why they sit outside the perimeter the Financial Conduct Authority is prepared to police.
Wall Street tokenized the vault, London wants to tokenize the wallet
When the SEC granted DTC a no-action letter in December 2025, it authorized a three-year pilot in which tokens move only between registered wallets belonging to DTC participants, covering Russell 1000 equities, major index ETFs and Treasurys. Nobody outside that membership can hold one, which makes the exercise an internal efficiency upgrade rather than a change in who can own an asset. The structure described by the LSE and Payward works the other way around, delivering the token into a user-controlled wallet from which it moves peer to peer, and the announcement pushes further by flagging future work on fully fungible native on-chain equity structures. Taken literally, that language points toward a blockchain functioning as the legal share register itself, with the depository layer removed rather than digitized. No regulator in any major market has authorized that, which is why it appears in the release as exploratory wording and nothing firmer.
Payward spent a year buying the pieces this deal needs
Kraken recently switched on trading in US-listed equities for clients in the European Economic Area, placing them in the same account as crypto and xStocks, which is the unified multi-asset portfolio it has been selling to retail users since the Backed acquisition closed. On the institutional flank, Bloomberg reported on Monday that the company is in advanced talks to route a subset of Hyperliquid’s perpetual futures into the United States through Bitnomial, the CFTC-regulated clearinghouse Payward bought for $550 million in May, giving it a licensed derivatives path most crypto venues lack entirely.
Rival exchange groups have reached the same conclusion from different directions. Deutsche Börse bought roughly 1.5% of Kraken for $200 million, Intercontinental Exchange backed OKX, and Nasdaq agreed to acquire LeveL Markets to assemble a round-the-clock trading gateway of its own.
None of them is waiting to see whether tokenized equities work before spending on the option.
The FCA decides whether 2027 happens
The World Federation of Exchanges and several national regulators have warned that tokenized equities fragment liquidity, blur what a retail buyer actually owns, and thin out the shareholder protections that justify public listing rules in the first place. None of those objections is answered by a settlement layer that works as designed.
The nearer obstacle is domestic. The FCA treats offshore xStocks as unregulated instruments today, so the 2027 timeline assumes either that this position shifts or that the LSE constructs a separate UK structure the regulator is willing to authorize from the outset. Those are substantially different projects with different approval paths, and Monday’s announcement does not specify which one is being attempted.
What the testing phase exposes first
LSE 24 opens to client testing at the end of 2026 and launches with exchange traded products, not equities, in the first half of 2027. That sequencing matters, because it means xStocks would arrive on the venue only after it has already run live in a lower-stakes asset class. The test will show whether a legacy exchange group can run matching, surveillance and reporting straight through a weekend under obligations written on the assumption of a closing bell. Market makers face the harder problem, because quoting a UK blue chip at four in the morning with no reference venue open means pricing without the arbitrage anchor they normally rely on, and the spreads they post in those hours will describe the viability of the model more honestly than launch-day volume figures will. The FCA’s treatment of tokenized securities will define the UK perimeter well before either firm needs a final answer, and its outcome determines whether tokenized FTSE 100 exposure stays an export product aimed at investors abroad or becomes something a London retail account can eventually hold.