Kraken Will Tokenize Major U.S. Stocks Via xStocks

xStocks promises to give investors the best of both worlds: the high-liquidity assets of TradFi and the efficiency and innovation of DeFi.

Kraken’s Latest Initiative, xStocks

Source: Kraken

What Is xStocks?

xStocks is Kraken’s latest offering aimed at expanding market access through tokenized securities. The project will allow users to purchase blockchain-based tokens that are backed 1:1 by real-world stocks and ETFs. These include popular blue-chip stocks like Apple, Tesla, and Nvidia, as well as major ETFs such as those tracking the S&P 500 or gold prices.

Backed By Real Assets

The tokenization process is handled by Backed Finance, a Switzerland-based firm specializing in asset-backed tokens. Backed will be responsible for acquiring and holding the underlying assets, ensuring that every token issued on Solana is fully collateralized.

Kraken Announcing Their Partnership With Backed Finance

Source: X (@krakenfx)

Kraken, meanwhile, will manage the sales and distribution of these tokens through its own platform.

Key Features Of xStocks

24/7 Market Access

Unlike traditional stock markets that operate within limited hours, xStocks will provide 24/7 trading availability. This flexibility is ideal for global investors who wish to trade U.S. financial assets at any time.

Crypto-Native Infrastructure

Built on the Solana blockchain, the xStocks system leverages fast transactions and low fees, reducing the friction often associated with traditional brokerages.

Exposure Without Borders

Though xStocks features American assets, it is not available to U.S. residents. The service is being launched internationally, with specific rollouts planned for markets in the U.K., Europe, and Australia.

Why Isn’t xStocks Available In the U.S.?

Despite its U.S.-focused asset base, Kraken has clarified that xStocks will not be offered to American clients. This decision appears to stem from regulatory uncertainty surrounding tokenized securities in the United States.

Past Precedents: Binance’s Regulatory Woes

Back in 2021, Binance attempted a similar move by offering tokenized Tesla stock. However, the initiative was quickly shut down by U.S. regulators, signaling that the legal landscape for such products remains murky.

Kraken’s decision to limit xStocks to international markets may be a precautionary strategy, allowing the company to innovate while avoiding the potential for legal repercussions at home.

Solana: The Blockchain Powering xStocks

Exclusive, For Now

Initially, xStocks tokens will be exclusive to the Solana blockchain, although this exclusivity is only temporary.

Solana representatives have hinted that this limited exclusivity may be lifted in the future, potentially opening the door for multi-chain expansion.

Why Solana?

Solana’s high throughput and low transaction costs make it an ideal choice for tokenizing real-world assets. The network is already known for handling thousands of transactions per second, making it one of the most scalable blockchains for financial applications.

What’s Next For Kraken & xStocks?

The xStocks program will first become available through Kraken’s mobile app, with phased rollouts to international markets throughout 2025.

In addition, as tokenization continues to gain traction in the broader financial world, Kraken hopes its new initiative will eventually become a major catalyst for mainstream adoption of crypto-financial products.

Future Integration Possibilities

While the product is currently exclusive to Kraken users, there is potential for wider availability down the road. Should xStocks prove successful, it may pave the way for other exchanges to offer similar tokenized investment options.

Though regulatory limitations prevent U.S. users from participating, for now, the rest of the world is about to get a taste of what happens when Wall Street meets Web3.