March 9 (Reuters) - Nasdaq on Monday announced

it will collaborate with Payward, parent company of

cryptocurrency exchange Kraken, to develop tokenization

infrastructure, aiming to capitalize on the growing interest in

blockchain-based equities.

Tokenization is the process of turning financial assets -

such as bank deposits, stocks, bonds, funds and even real estate

- into crypto assets that can be traded on blockchains, which

are the ledgers underpinning digital assets.

* In September, the exchange operator sought Securities and

Exchange Commission approval to allow trading in "either

traditional digital or tokenized form".

* Institutional adoption of digital asset infrastructure has

advanced after the passage of the GENIUS Act last year, with

more regulation still being discussed.

* In January, NYSE parent Intercontinental Exchange ( ICE )

said it was seeking regulatory approval for a blockchain-based

platform to enable 24/7 trading and on-chain settlement of

tokenized securities.

* Robinhood, Gemini and Kraken have

already launched tokenized stocks in Europe, while Coinbase

and startup Dinari are seeking approval for similar

products in the U.S.

* However, with bitcoin hovering around levels seen before

the 2024 presidential election victory of Donald Trump,

investors continue to be split on the role of cryptocurrencies

in portfolios.

* Under the partnership, Nasdaq will use Payward's xStocks,

a tokenization platform, to enable clients to move securities

from institutional trading infrastructure to blockchain

networks.

* Nasdaq said that plans for tokenizing stocks and other

exchange-traded products will focus on corporate actions, proxy

voting and shareholder engagement.

* "Tokenization has the potential to unlock the benefits of

an always-on financial ecosystem - enhancing how investors

access markets, how issuers engage with shareholders," said Tal

Cohen, president, Nasdaq.