Ledger and Kraken Bring Cold Storage to Tokenized Stocks

Ledger and Payward, the parent company of Kraken, announced a partnership that moves xStocks tokenized equities under the protection of a hardware wallet. Owners of the device will be able to sign xStocks transactions directly on the device, keeping their private keys out of the exchange entirely. The rollout starts in Europe and the UK with debit card and bank transfer support, ahead of a planned expansion to further regions. xStocks has already crossed $42 billion in cumulative trading volume since launch.

Key Takeaways

• Ledger and Payward (Kraken) let users hold xStocks tokenized equities in cold storage
• Transactions are signed directly on the device through Clear Signing
• Initial rollout covers Europe and the UK, with card and bank transfer support

The private key never leaves the device

The partnership runs on Ledger’s Device Management Kit, which lets customers deposit, withdraw and sign xStocks transactions without the private key ever leaving the device. Every operation goes through Clear Signing, a feature that displays the full transaction detail on the device’s secure screen before the user approves it.

xStocks tokens are on-chain equivalents of real listed shares, issued by Payward and backed one to one by the underlying stock. They remain unavailable to US customers and a handful of other jurisdictions for now. The tradeoff between keeping assets on an exchange or moving them into cold storage, already spelled out in the site’s cold wallet versus hot wallet comparison, now extends to tokenized equities as well.

The wallet maker is targeting its existing base of eight million customers first, people drawn to self-custody but until now forced to step outside their hardware wallet to trade tokenized stocks. Chairman and CEO Pascal Gauthier frames the deal as a way to give those users secure access to Payward’s financial infrastructure without giving up control of their keys.

Payward co-CEO David Ripley makes the case that self-custody and exchange access finally merge into one experience under this integration, in the official partnership post published by Ledger. He points to deeper integration ahead, including Payward’s services for banks and fintechs delivered through Ledger Enterprise.

xStocks crosses $42 billion in trading volume

Card and bank transfer payments are available from launch across Europe and the UK. Payward plans to gradually add payment methods and geographies, without a firm calendar disclosed at this stage.

xStocks has crossed $42 billion in cumulative volume since launch, a figure that confirms the momentum already visible when tokenized stocks doubled to 1.3 million holders in a single month. The hardware wallet maker says it is in talks with Coinbase, Binance and Robinhood, each of which runs its own tokenized equity product. Robinhood already topped $70M in tokenized stocks on its own Arbitrum rollup.

The SEC’s innovation exemption granted last year opened the regulatory path for this kind of product inside the United States, even though xStocks itself remains out of reach for US customers for now. The convergence between crypto infrastructure and the traditional stock market has picked up speed over the past several months, with custodians, brokers and exchanges all racing to bridge the two rails.

Kraken had already struck a partnership with Nasdaq back in June to distribute xStocks more widely, and the exchange opened 7,000 commission-free US stocks to European customers in August. This Ledger deal adds the self-custody piece that strategy was still missing.

For an institutional desk weighing whether to route tokenized equity exposure through a custodian or a self-custody rail, the calculation now includes a hardware option that did not exist for this asset class a week ago. The distinction between broker custody and self-custody, long settled for spot crypto, is only now getting rebuilt for tokenized securities.

Also on Cryptonomic:

• Bitget Loses $351.6M in a Withdrawal-System Hack
• CME Lists Uniswap Futures Starting October 19
• Bitcoin Options Worth $15.9B Expire on Friday

Ledger answers ZachXBT’s criticism with a product

The deal lands after a rough stretch for the company’s reputation. On-chain security researcher ZachXBT publicly dismissed hardware wallets as a category, naming Ledger directly in his criticism.

By leaning on a concrete partnership with a major exchange rather than a defensive statement, the company is betting that a working product answers the criticism better than a rebuttal would. The xStocks integration sits alongside the buy, sell and swap features Ledger Wallet already offers through Payward Services.

Kraken has given no date for the Ledger Enterprise extension aimed at banks and fintechs. The outcome of that phase will decide whether self-custody becomes a standard feature for tokenized equities or stays a niche option for a small slice of holders.

Follow the story on Cryptonomic.