Tokenized Equities Climb to $10 Billion, Putting Regulators in a Legal Gray Area
- Kraken's xStocks platform, a joint venture with Backed, surpassed $10B in transaction volume four months post-launch, tokenizing equities like Tesla and Meta . - The platform enables 24/7 trading and fractional ownership across Ethereum , Solana , BNB Chain, and Tron , with $2B in onchain activity and 45,000 holders. - Legal ambiguity persists as tokenized stocks are treated as derivatives, not direct securities, with experts warning of liquidity risks and regulatory challenges. - Kraken's cautious focus
Kraken’s xStocks platform, developed in collaboration with RWA tokenization company Backed, has exceeded $10 billion in total trading volume a little over four months since its debut, signaling a significant achievement for the tokenized equity market. The service provides digital tokens that are fully backed 1:1 by real shares of publicly listed stocks and ETFs—such as
The swift uptake of tokenized equities has ignited discussions about their legal classification. John Murillo, Chief Business Officer at fintech company B2Broker, pointed out that although xStock tokens reflect the price of the underlying securities, they do not grant actual ownership rights. "Investors possess tokens issued by intermediaries, which could provide payouts if the original shares appreciate or are sold," he explained, as
Kraken’s prudent strategy stands in contrast to rivals like Robinhood, which recently faced criticism for issuing tokens representing shares in private firms, including OpenAI. Kraken’s co-CEO Arjun Sethi labeled such moves as "terrible ideas," highlighting potential liquidity problems and regulatory hurdles, as
The xStocks approach has been likened to platforms such as Securitize, which also tokenizes shares and investment funds, as well as Robinhood’s stock token offerings in certain regions. However, Kraken’s alliance with Swiss custodian Backed Finance and its support for multiple blockchains have helped it stand out in the sector. The platform’s rapid expansion mirrors the wider growth in RWA tokenization, with blockchain analytics firms noting a 300% increase in activity over the past year, as
Although regulatory certainty is still lacking, the European Union’s MiCA regulation provides some guidance for crypto assets, but equities remain a complex area. Sethi’s perspective highlights the ongoing tension in the industry between innovation and regulatory compliance, as platforms strive to balance ease of access with investor safeguards, as
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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