Reports indicate that Kraken is planning to introduce tokenized versions of over 50 stocks and ETFs, allowing non-US clients to trade. This new initiative is set to launch in the coming weeks. These tokens can be traded around the clock—even when US stock markets are closed. Kraken claims that these tokenized stocks offer international investors a cheaper and more convenient way to access the US stock market.
On Thursday, according to media reports, popular US stocks such as Apple, Tesla, and Nvidia will be traded in token form on the cryptocurrency exchange Kraken. Kraken plans to allow non-US clients to trade stocks like Apple, with this new initiative launching in the coming weeks. Kraken is planning to introduce tokenized versions of over 50 stocks and ETFs. The ETFs planned for tokenization include well-known ones like the SPDR S&P 500 ETF and SPDR Gold ETF. Kraken refers to these tokens as “xStocks” and will operate them on the Solana blockchain. Blockchain is a decentralized ledger that records cryptocurrency transactions. xStock tokens will be backed by the actual stocks corresponding to the underlying securities, with Kraken’s partner company Backed Finance purchasing new stocks as needed. These tokens can be redeemed based on the cash value of the underlying securities. In theory, the token price should align with the market price of the corresponding stock or ETF. Similar to Bitcoin, these tokens can be traded around the clock—even when US stock markets are closed. Headquartered in the US, Kraken has clients in over 190 countries. Kraken states that these so-called “stock tokenization” products will make it easier for non-US investors to invest in US stocks. Tokenized stocks will be available in Europe, Latin America, Africa, and Asia; US users will not be able to trade these tokens. Why put stocks on the blockchain? In addition to offering the advantage of 24/7 trading, Kraken also states that these tokenized stocks provide international investors with a cheaper and more convenient way to enter the US stock market. Kraken’s co-CEO, Arjun Sethi, said, “Overseas investors can currently buy US stocks through local brokers, but often with high fees, slow settlement times, and a lot of friction. ” In the future, xStocks investors may even be able to trade these tokens on cryptocurrency exchanges other than Kraken and can transfer them into personal crypto wallets to hold alongside other assets like Bitcoin.High-risk preference investors can even use tokenized stocks such as Apple and Tesla as collateral for their cryptocurrency trading strategies. Tokenized stocks have been attempted before; the world’s largest cryptocurrency exchange, Binance, launched tokenized products for US stocks like Tesla in 2021, but they were forced to be delisted after a few months due to warnings from global regulatory agencies that Binance did not hold the appropriate licenses.
Similarly, Kraken must navigate the complex regulatory environments of various countries to ensure the legal issuance of xStocks. A Kraken spokesperson stated that the company is “actively cooperating with multiple regulatory bodies.” Blockchain advocates have long argued that tokenization can surpass traditional securities trading methods in terms of settlement speed, cost, and flexibility. As the Trump administration and the U. S. Congress advance new regulations for cryptocurrency transactions, this topic has heated up again in recent months. The U.S. Securities and Exchange Commission (SEC) has held roundtable discussions on security tokenization this month, and well-known Wall Street companies such as BlackRock and Robinhood are also actively promoting the development of such products. Risk warning and disclaimer: The market is risky, and investment should be approached with caution. This article does not constitute personal investment advice and has not taken into account individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article align with their particular circumstances. Responsibility for investment decisions based on this information is solely at the investor’s discretion.