According to reports, Kraken plans to launch over 50 tokenized stocks and ETFs, including for big-name companies like Apple, Tesla and Nvidia. The tokenized stocks will allow non-U.S. customers to trade American stocks on the Solana blockchain.
Kraken is now joining the league of major industry players exploring ways to digitize traditional assets like stocks, bonds, and real estate. BlackRock and Robinhood have shown interest in tokenizing securities. Others like JPMorgan and Franklin Templeton are also already testing tokenized assets in pilot programs.
Kraken plans to launch xStocks
Kraken, a U.S.-based cryptocurrency exchange, has announced plans to launch tokenized versions of over 50 popular U.S. stocks and exchange-traded funds (ETFs) for its non-U.S. customers. The offer will not be available to U.S.-based users due to regulatory restrictions.
The offer allows investors outside of the U.S. to buy and trade tokenized shares of companies like Apple, Tesla, and Nvidia. It also gives them access to ETFs such as the SPDR S&P 500 and SPDR Gold Shares.
The tokens called “xStocks” will enable customers in regions such as Europe, Latin America, Africa, and Asia to trade these tokenized assets 24/7, even when traditional markets are closed. This development is set to roll out in the coming weeks.
Kraken’s xStocks tokens will be issued on the Solana blockchain and each xStock will represent a tokenized version of a real-world stock or ETF.
The tokens will be backed by shares of the underlying security with Kraken’s partner company, Backed Finance. Customers will be able to redeem the tokens for the cash value of the underlying stock or ETF. Kraken suggests this model could significantly lower the cost and complexity for international investors seeking exposure to U.S. equities.
“There’s a lot of friction,” Kraken’s co-CEO, Arjun Sethi said, stating that tokenization could ease the process of investing across borders.
The company hopes that xStocks will eventually be traded on other crypto exchanges, transferred to personal digital wallets, and even used as collateral for crypto-based lending or trading strategies.
Tokenized securities are the new wave
In 2021, before Kraken attempted to bring sticks to the blockchain, Binance launched a similar initiative with tokenized versions of U.S. stocks like Tesla. However, the offering was quickly made unavailable after the company experienced significant regulatory pressure.
Kraken appears to be taking a more cautious and compliant approach. A spokesperson for the company said that the company is “actively working with various regulators” to ensure the xStocks are offered legally in each region.
Firms like BlackRock and Robinhood Markets have also expressed interest in exploring tokenization, and have cited benefits such as improved settlement speeds, reduced costs, and enhanced transparency as reasons for their interest.
The Securities and Exchange Commission (SEC) recently hosted a roundtable to explore the implications of tokenizing traditional securities. Advocates of tokenization argue that it could transform how assets are traded, settled, and stored by eliminating intermediaries and enabling real-time, round-the-clock trading.
For investors in regions with limited access to U.S. financial markets, Kraken’s xStocks could offer an opportunity for them to participate in high-profile American companies.
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