Kraken Acquires xStocks, Bolstering Tokenized Equities Offering
- Kraken has announced its acquisition of Backed Finance AG, the company behind the xStocks tokenized equity platform.
- This acquisition aims to integrate xStocks’ issuance, trading, and settlement capabilities into Kraken’s existing product suite, including its global money app.
- The move signifies Kraken’s commitment to expanding its offerings in the rapidly growing tokenized assets market.
- xStocks provides tokenized versions of public equities and ETFs on blockchains like Solana and Ethereum, with significant trading volume since its launch.
- This acquisition follows Kraken’s previous rollout of xStocks’ products to European users and its broader strategy of acquiring companies in the trading and fintech space.
- Tokenized equities are gaining significant traction, with major platforms like Robinhood also entering the market, indicating a broader industry trend towards digitizing traditional assets.
Kraken Expands Tokenized Assets Push with xStocks Acquisition
US-based cryptocurrency exchange Kraken has officially agreed to acquire Backed Finance AG, the Swiss financial technology company responsible for the popular xStocks platform. This strategic move is set to significantly enhance Kraken’s presence in the burgeoning market for tokenized equities, adding another dimension to the exchange’s recent acquisition streak.
The integration plans are substantial. Kraken intends to embed xStocks’ robust infrastructure for issuing, trading, and settling tokenized assets more deeply into its own offerings. This includes its global money app, with aspirations to broaden support across additional blockchains and international markets. This synergy promises a more streamlined and accessible experience for users interested in digital representations of traditional securities.
xStocks has emerged as a notable player, specializing in the creation of digital tokens backed by publicly traded equities, such as individual stocks and Exchange Traded Funds (ETFs). Since its inception earlier this year, the platform has garnered significant attention, currently offering over 60 distinct tokenized products and facilitating more than $10 billion in combined exchange and on-chain trading volume.
💡 The tokenization of traditional assets like stocks bridges the gap between the cryptocurrency world and conventional finance, offering potential benefits such as increased accessibility, fractional ownership, and 24/7 trading capabilities. Understanding these benefits is key to grasping the strategic importance of acquisitions like this.
Exploring the Technicals of Tokenized Equities
The tokenized assets issued by xStocks are currently available on both the popular Solana and Ethereum blockchains. This dual-chain presence allows for trading around the clock, directly on-chain, providing flexibility for investors. Furthermore, xStocks emphasizes the self-custodial nature of these assets, enabling users to maintain control and move them across various compatible networks.
This acquisition by Kraken is not an isolated event but part of a larger strategic initiative. Earlier in September, Kraken had already enabled eligible European users to access Backed’s xStocks product, hinting at the underlying synergy and mutual strategic interest that has now culminated in this full acquisition.
Kraken also manages the xStocks Alliance, a network designed to foster collaboration among partnered blockchain chains and trading venues. The company anticipates that this acquisition will serve to consolidate and strengthen this alliance. By doing so, Kraken aims to promote greater interoperability and enhance liquidity as the landscape of tokenized equities continues to expand with more markets embracing these digital assets.
📌 The integration of xStocks by Kraken highlights a significant trend in the digital asset space: the convergence of traditional finance and blockchain technology. As more financial instruments are tokenized, the infrastructure required for their seamless trading and settlement becomes increasingly crucial.
Kraken’s Acquisition Spree and the Rise of Tokenized Equities
Kraken’s pursuit of xStocks is indicative of its aggressive expansion strategy in 2023. The exchange, which confidentially filed for a US IPO in November, has made several key acquisitions throughout the year. These include NinjaTrader in May, the proprietary trading platform Breakout in September, and Small Exchange, a designated contract market, in October, demonstrating a clear intent to diversify and fortify its market position.
Tokenized Equities Gain Traction Across Major Platforms
The ascent of tokenized equities represents one of the most significant trends within the cryptocurrency sector this year. These digital tokens, which signify ownership of traditional stocks on a blockchain, are increasingly attracting interest from both established financial institutions and innovative crypto platforms.
In June, xStocks expanded its reach by launching on prominent platforms such as Bybit and Kraken, alongside several decentralized finance (DeFi) platforms built on Solana. This rollout included tokenized versions of widely recognized blue-chip stocks like Netflix, Meta, Coinbase, Amazon, Nvidia, McDonald’s, Apple, Tesla, and Microsoft, underscoring the growing availability of these assets.
The global trading platform Robinhood also made a significant entry into the tokenized stock market. In the same month, it launched its own layer-2 blockchain on Arbitrum and introduced tokenized stock trading specifically for users in the European Union. This offering debuted with more than 200 US stock and ETF tokens, notable for their 24/5 trading availability and absence of commissions.
📊 Data from Dune Analytics indicates that Robinhood currently lists 943 tokenized stocks and ETFs on the Arbitrum network, with a combined on-chain value approaching $10.8 million. This figure represents tangible growth in the adoption of tokenized securities on blockchain infrastructure.
Separately, RWA.xyz tracks approximately $656 million in regulated tokenized public stocks, showing substantial market activity with $1.14 billion in monthly transfer volume and around 118,000 unique holders. Among the leading regulated issuers, Ondo commands about 52% of the market share, followed by Backed Finance at 24% and Securitize at 20%, illustrating the competitive landscape.
Frequently Asked Questions about Tokenized Equities
What are tokenized equities?
Tokenized equities are digital tokens issued on a blockchain that represent ownership of traditional, publicly traded stocks or ETFs. They aim to bring the benefits of blockchain technology to traditional financial markets.
Which blockchains support xStocks?
Currently, xStocks tokenized assets are available on the Solana and Ethereum blockchains, allowing for on-chain trading and self-custody.
What is the significance of Kraken’s acquisition of xStocks?
The acquisition signifies Kraken’s strategic investment in the rapidly growing tokenized assets market and aims to integrate xStocks’ technology into Kraken’s broader product ecosystem, enhancing trading and accessibility.
Are tokenized stocks available outside of crypto exchanges?
Yes, platforms like Robinhood have introduced tokenized stock trading, particularly for European users, demonstrating that tokenized assets are extending beyond dedicated crypto platforms into more mainstream financial applications.
What is the market trend for tokenized equities?
Tokenized equities are experiencing significant growth, with increasing participation from major exchanges, DeFi platforms, and traditional trading services. Data shows substantial trading volumes and holder bases, indicating strong market traction.
The Future of Tokenized Assets on Kraken
Kraken’s acquisition of Backed Finance AG, the entity behind xStocks, marks a pivotal moment in the exchange’s strategy to embrace the future of digital finance. By integrating tokenized equities, Kraken is positioning itself at the forefront of a financial revolution where traditional assets meet blockchain innovation.
This move is likely to unlock new avenues for investors, offering enhanced liquidity, accessibility, and trading efficiencies. As Kraken continues to consolidate its position through strategic acquisitions, the broader adoption of tokenized assets across various blockchains and markets seems increasingly probable.
Moving forward, the integration of xStocks into Kraken’s platform should pave the way for more sophisticated digital asset products and services. This acquisition underscores the growing convergence of TradFi (traditional finance) and DeFi (decentralized finance), suggesting a future where the lines between these worlds become increasingly blurred.
