Kraken has just announced the launch of xStocks, a program to tokenize over 50 U.S. stocks and ETFs. These assets will be stored on Solana's blockchain, backed by a corresponding amount of original shares.
Users will have 24/7 access to traditional financial markets, with all the convenient features of a native cryptocurrency infrastructure. Specific products include Apple, Tesla, Nvidia, and major non-cryptocurrency ETFs.
Kraken is Bringing TradFi into the Crypto Market
Kraken is currently the second-largest cryptocurrency exchange in the U.S. by daily trading volume. In the past year, the U.S. market has been its top priority for expansion and new activities. U.S. customers have access to staking features, and U.S. policy decisions have significantly impacted the exchange's revenue.
However, when Kraken announced xStocks, its new set of tokenized assets, they made it clear that these assets will only be available in foreign markets:
Kraken's press release did not specify which stocks would be tokenized on xStocks. Fortunately, traditional financial media have reported on some of them.
Large tech companies like Apple, Tesla, and Nvidia are obvious choices, but xStocks will also allow ETFs based on the S&P 500 and gold prices.
In total, Kraken will tokenize around 50 assets, all based in the United States.
This is not the first time a major cryptocurrency exchange has tried to do this. In 2021, Binance attempted to tokenize Tesla stock, but U.S. regulators quickly rejected this proposal.
Cryptocurrency-friendly regulations are increasing in the U.S., but it's unclear whether the government's response will be different this time.
This may explain why Kraken is only offering xStocks abroad. The company still needs to negotiate agreements with foreign markets, but this level of isolation could make the process more feasible.
xStocks will provide Kraken users with 24/7 access to U.S. financial instruments, with a native cryptocurrency infrastructure to reduce fees and consumer barriers.
Technically, Backed Finance has developed the tokenization system, but Kraken is handling the sales. For its part, Backed will handle purchasing the underlying assets when necessary to ensure a stable reserve.
Although xStocks will initially be exclusive to Kraken users, this could change in the future. Solana has stated that they will only be exclusive to their blockchain "for a limited time," but it's unclear how long this temporary arrangement will last.
Currently, Kraken plans to deploy these products on its app, followed by market access for the United Kingdom, Europe, and Australia.
