tl;dr
Crypto exchange Kraken is advancing efforts to tokenize traditional assets through its xStocks program, launched three months ago, which tokenizes over 50 US stocks and ETFs on Solana’s blockchain for eligible clients in select non-US markets. Kraken met with the SEC’s crypto task force on August 25...
Crypto exchange Kraken and the US Securities and Exchange Commission (SEC) are reportedly advancing efforts to tokenize traditional assets following Kraken’s launch of xStocks three months ago. xStocks is a program designed to tokenize over 50 US stocks and exchange-traded funds (ETFs), offering tokenized versions available to eligible clients in select non-US markets. The assets are hosted on Solana’s blockchain and backed by corresponding amounts of the original stocks, with major tech companies like Apple, Tesla, and Nvidia among those reportedly included, alongside ETFs based on the S&P 500 and gold prices.
On August 25, Kraken representatives met with the SEC’s crypto task force to discuss the legal and regulatory frameworks required for operating a tokenized trading system in the US. The meeting focused on the transaction lifecycle within the system and the applicability of federal securities laws. Kraken advocates tokenization as a technological innovation that can enhance capital formation and democratize market access. The exchange aims to secure regulatory clarity from the SEC to facilitate innovation in this space.
This development marks a strategic step by Kraken following a failed attempt by Binance to tokenize Tesla stock back in April 2021, which was swiftly blocked by US regulators. Kraken’s progress is attributed in part to clearer regulatory guidance under the SEC’s crypto task force, led by Commissioner Hester Peirce, which was established in January to address digital asset regulation and compliance.
However, Kraken still faces scrutiny from regulatory bodies like the World Federation of Exchanges (WFE), which has called for tighter oversight of tokenized stocks. The WFE expresses concerns that tokenized assets mimic equities but lack shareholder rights and market safeguards, potentially threatening investors and market integrity. Despite this, Kraken has showcased strong year-over-year gains and remains among the few crypto-native entities to secure bank charters, positioning itself as a leader in navigating both regulatory and market challenges in the evolving crypto and finance landscape.