In the latest example of the ongoing convergence between the worlds of crypto and traditional assets, investors can now purchase tokenized versions of popular stocks and store them off-line in a secure physical device. This new arrangement—which harkens back in a sense to the days when people held paper stock certificates in a safe—comes via a partnership announced on Thursday between the hardware wallet maker Ledger and Payward, the parent company of longtime crypto exchange Kraken.
For those unfamiliar with crypto hardware wallets, they are considered highly secure because they allow users to store digital assets on a physical device that is not connected to the internet. This method of holding assets, known as “cold storage,” has long been popular with hardcore Bitcoin devotees who are reluctant to entrust their assets to a third party or store them online where hackers can target them.
Until now, there has not been a “cold storage” option for holding stocks—unless you count holding paper certificates, which remains an option but is now so rare that it requires undertaking a complicated request process and paying steep fees. This raises the question, though, of how many investors will feel a need to hold their stocks on a physical device, especially in an era when online brokerages handle trillions of dollars of transactions every day with few incidents.
According to Sebastien Badault, a Ledger executive who is leading the Payward tie-up, the company believes that the newfound popularity of tokenized stocks—which took off last year and just received an “innovation exemption” from the SEC—will make cold storage appealing to two sets of investors.The first are some of Ledger’s approximately 8 million customers, both retail and institutional, who prefer self-custody for their assets rather than relying on third parties. The other group of potential customers, says Badault, are more traditional stock buyers who may be growing uneasy with the rising threat of hackers in the age of AI and quantum computing.
As a practical matter, Badault said the integration between Payward and Ledger runs both ways. This means that a customer who uses Payward’s stock-buying platform, xStocks, can require a signature on their Ledger device as a final security measure before completing a transaction. At the same time, Ledger devices—which offer a trading platform in addition to simple custody—will now include an xStocks integration.
For now, the Ledger devices, including its flagship Stax model developed by former Apple designer Tony Fadell, will only integrate with Payward’s version of tokenized stocks. Badault noted, however, that the company is in talks with other companies—including Coinbase, Binance and Robinhood—that have rolled out tokenized stocks of their own in recent months.
All of this comes at a time when tokenized stocks, which have primarily gained traction overseas, represent just a tiny portion of the broader stock market. Meanwhile, a recent security incident involving a little-known hardware wallet-maker has spurred a debate over whether self-custody is a viable option even for crypto devotees.
Badault, though, makes the case that Ledger’s user-friendly design and the broader push towards tokenization means that, in coming years, more individuals and institutions will come to embrace storing assets of all sorts on secure off-line devices.
In a statement, Payward’s co-CEO David Ripley, said “By partnering with Ledger, we’re building where the industry is heading: a future where secure self-custody and global financial infrastructure work hand in hand to provide powerful and seamless trading experiences.”
This story was originally featured on Fortune.com
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