BNY in talks with Kraken parent Payward over custody and trading infrastructure

BNY is in talks with Payward, the Wyoming-based parent of the crypto exchange Kraken, about a partnership that would reach into custody, trading, wealth management, payments and other financial-market infrastructure, according to two people familiar with the discussions. CoinDesk reported the talks, which those people described as ongoing and which come with no guarantee that an agreement will be reached; the account carries no financial terms, and both Payward and BNY declined to comment.

Any deal would run largely through Payward Services, the company's business-to-business arm supplying infrastructure to banks, exchanges, asset managers, fintechs, brokerages and payment companies, and one person familiar with the talks said elements of the proposed arrangement could resemble the infrastructure component of Payward's agreement with Nasdaq. Nasdaq Ventures agreed to invest $100 million in Payward at a $21 billion valuation, and the two firms will keep developing the operational and commercial infrastructure for Nasdaq Equity Tokens, which they expect to launch in the second quarter of 2027; Payward will also adopt Nasdaq's market-surveillance technology across its crypto, equities, tokenized-equities, futures and options venues.

BNY supplies the other half, and the more regulated one: formerly Bank of New York Mellon, it provides custody, asset servicing, clearing and wealth-management services to institutional clients and has been developing tokenized deposits meant to support near-real-time onchain settlement between institutional market participants. Payward's footprint runs from the Kraken exchange into spot crypto, derivatives, tokenized equities, custody, staking, payments and traditional securities, with Payward Services underneath as the wholesale layer, and it has bought adjacent businesses as well — an April agreement to acquire U.S. crypto derivatives firm Bitnomial for as much as $550 million, a $600 million deal for the stablecoin-payments company Reap, and, before those, an acquisition valued at approximately $1.5 billion.

For all the breadth of the list, the parts a fiduciary would want pinned down first are narrow: a custody bank partnering with a crypto-native firm has to settle which entity is custodian of record, whose ledger is authoritative, and what happens to client assets if the venue side of the arrangement fails. The CFTC's stance on tokenized collateral this month allows customer funds to sit in tokenized assets and permits ledgers to serve as the official record, but the equivalence clause puts the burden of proof on the wrapper. Those are the terms that would decide whether a client's compliance committee can approve a Payward rail at all.

Payward has been building its institutional perimeter carefully, and the xStocks wrapper shows the pattern: those tokens trade as loan notes backed by a Jersey share pool, leaving the equity itself parked in the vehicle while tokenholders hold debt, which suggests a custodian in the chain takes on an obligation tied to that pool rather than an obligation tied to shares it holds directly. A bank bringing tokenized deposits, servicing and distribution into an arrangement like that is underwriting a legal structure as much as it is distributing a product.

The language around Nasdaq Equity Tokens is instructive on that front: the initiative is intended to link Nasdaq's regulated markets to Payward's xStocks ecosystem while preserving shareholder rights, regulatory protections and issuer control. Those are the questions a listed company asks before its shares appear in a new wrapper, and the questions an institution asks before its assets sit on a new rail. Any BNY agreement would be judged on similar terms, whether or not an announcement uses those words.

There is a reason the counterparty being discussed is a custody bank rather than a second exchange: bank charters, trust companies and prime brokers have been building institutional-grade custody capacity, and the durable positions in tokenized equities — custody, issuer notice, synthetic exclusions — belong to whoever is named as recordkeeper rather than to whoever runs the matching engine. BNY's tokenized-deposit work points at where the demand has actually been: assets that move and settle between institutions in near-real time, without a correspondent sitting in the middle for a day. Pairing that settlement asset with a firm running venues, payments and a wholesale infrastructure arm gives each side the piece it lacks.

The Nasdaq tie-up already carries a compliance dimension — market surveillance running across crypto, equities, tokenized-equities, futures and options venues — that a custody bank can resell to its own clients, and it gives any broader Payward partnership a template to copy. Whether BNY buys that package is now a question with a date attached: Nasdaq Equity Tokens are scheduled for the second quarter of 2027, while no timeline, terms or structure have emerged for the bank talks beyond the list of business lines.