Kraken parent and LSEG plan tokenised UK

Payward, the parent company of crypto exchange Kraken, and the London Stock Exchange Group (LSEG) are exploring the tokenisation of the 100 largest UK-listed companies. According to a joint announcement, Payward's version of these 'xStocks' is expected to reach eligible investors in more than 100 countries within weeks.

Separately, LSEG's Digital Securities Depository could handle settlement. The exchange group also intends to list xStocks on its planned 24-hour trading venue, LSE 24, starting in 2027, subject to regulatory approval.

How xStocks are created and traded

An xStock is a blockchain token backed 1:1 by a real share. The companies announced the framework has already help over $40 billion in total volume in just over a year, including nearly $20 billion settled on-chain, across more than 200,000 holders.

Minting a new token is a physical, three-step process. First, the issuer buys the real share on the open market through a Jersey-registered entity called Backed Assets (JE) Limited. That share is then deposited with a regulated custodian, with GTN providing international execution, custody, and recordkeeping. Finally, the token is minted 1:1, becoming blockchain-agnostic and movable between exchanges, self-custodied wallets, and DeFi protocols. Fractional ownership can start from as little as $1.

Redemption reverses the process: the token is burned, the underlying share is sold, and the proceeds are returned to the holder. This structure means net new issuance of xStocks represents real buy-side demand for the underlying share, similar to the market impact of physically backed ETFs.

Two factors temper this impact. The mechanism only applies to net new issuance, not the $40 billion in existing volume, most of which is secondary trading that never touches the real share. Also, redemptions push the same mechanism in reverse, selling shares back into the market just as directly as minting buys them.

Regulatory barriers for UK investors

Despite being based on London-listed companies, xStocks will not be available to investors in the United Kingdom. The announcement cites two primary reasons.

First, xStocks are not shares and are therefore not subject to UK stamp duty. Share trading attracts this tax, but xStocks allow investors to gain exposure to the underlying share without actually owning it. The government is reportedly looking at a single securities transfer tax as an option to address lost revenues.

Second, the Financial Conduct Authority's (FCA) retail ban on crypto derivatives remains in force. The regulatory status of tokenised equity tracker certificates like xStocks within this framework is unresolved. Recent regulatory moves, including the October 2025 reversal on retail crypto ETNs and the April 2026 fund tokenisation rules in PS26/7, do not cover this specific product category.

The path to a UK-compliant structure

The Bank of England and the FCA published a joint Call for Input on 18 May 2026 focused on tokenised securities, including cash equities. This will inform a shared roadmap, with settlement intended to stay anchored in central bank money and delivery targeted for 2028.

LSEG reiterated its intention to list and support xStocks on its LSE 24 venue in 2027, pending regulatory approval, even while UK-based investors remain excluded. An unresolved question is whether that 2027 timeline assumes the FCA will shift its treatment of the existing offshore structure or if a separate, UK-authorised structure must be built from scratch. The source's analysis suggests the 2027 date looks optimistic.