Kraken to Launch Tokenized Stocks and ETFs Outside US

Cryptocurrency exchange Kraken is reportedly set to start rolling out tokenized equities that will be available to customers in Europe, Latin America, Africa and Asia in the coming weeks.

Using tokens called xStocks, Kraken plans to offer tokenized versions of more than 50 stocks — including Apple, Tesla and Nvidia — and exchange-traded funds (ETFs), The Wall Street Journal (WSJ) reported Thursday (May 22), citing its interview with Kraken co-CEO Arjun Sethi.

The offering will not be available to customers in the United States, according to the report.

The xStocks will trade on the Solana blockchain, will be backed by shares held by Backed Finance and will be redeemable for the cash value of the underlying securities, per the report.

Backed announced the launch of xStocks in a Thursday press release, saying it will serve retail and institutional investors.

“The upcoming xStocks launch marks a systemic leap toward mainstream adoption of tokenized securities,” Backed said in the release. “Kraken and Solana join us as we lead the charge, powering access, liquidity and enabling DeFi integrations, but our mission doesn’t stop there: xStocks should be available on any chain, and on every exchange.”

Enabling customers outside the U.S. to trade stocks as tokens over a digital ledger will make it easier for these customers to trade in the stocks, will enable them to do so around the clock, and will allow them to access the stocks without the fees charged by local brokerages, the WSJ report said.

Crypto exchange Binance launched tokenized versions of some U.S. stocks in 2021 but stopped months later when regulators around the world said it lacked the necessary licenses, according to the report.

A Kraken spokeswoman told the WSJ that Kraken is “actively working with various regulators” to ensure xStocks are offered legally.

Kraken announced in an April 14 blog post that it began offering commission-free trading on more than 11,000 U.S.-listed stocks and ETFs to select U.S. clients in nine states and the District of Columbia and that it plans to expand access to more states.

That offering marked the crypto exchange’s first entry into equities and enables its clients to manage stocks, crypto, cash and stablecoins in one place, according to the post.

“Expanding into equities is a natural step for us and paves the way for the tokenization of assets,” Sethi said in the post.