Nasdaq-Payward Deal Sparks Debate Over Tokenized Markets Regulation

The $100 million investment by Nasdaq in Payward, the parent company of Kraken, has sparked debate over the regulation of tokenized markets. The agreement includes a plan to roll out surveillance technology across various trading venues, covering assets such as crypto, equities, and futures. However, this move has been met with concern from Citadel Securities, which has asked regulators to keep equity-linked derivatives within the SEC's perimeter.

Citadel argues that these products pose a risk of manipulation and insider trading due to their complex nature and potential for cross-market access to sensitive information. The company believes that effective oversight requires regulators to surveil these products together with activity in the underlying cash-equity market. In contrast, Nasdaq's surveillance technology cannot determine what a product is under federal law.

The classification of equity-linked perpetuals remains a contentious issue, with different regulatory routes available depending on whether they are considered securities, swaps, or futures contracts. The SEC and CFTC have differing approaches to listing these products, with the former requiring prior approval and the latter allowing for self-certification by exchanges.

The approval of Nasdaq's tokenized securities under the DTC pilot in March 2026 did not establish a launch date, and the company expects its work with Payward on Nasdaq Equity Tokens to begin trading in the second quarter of 2027. The SEC will hold a roundtable discussion on September 17 to address preparations for 24-hour trading in conventional market infrastructure.