Kraken to Offer Tokenized Stock Trading on Solana to Overseas Customers

Kraken will soon offer overseas customers the ability to trade U.S.-listed stocks through the crypto exchange’s platform, the company said in a press release on Thursday.

The offering, which covers more than 50 U.S.-listed stocks and exchange-traded funds, will be facilitated through a partnership with Backed, a firm specializing in tokenized securities, using the Solana blockchain to offer so-called xStocks, the company said.

Tokenization refers to the process of taking real-world assets, whether stocks or bonds, and representing them on-chain using digital assets. Kraken said that stocks will be represented on Solana using SPL tokens, a token standard mirroring ERC-20 tokens on Ethereum. xStocks, which will be issued on a public blockchain, are expected to trade around the clock.

According to Kraken, the exchange and Backed chose Solana as the first chain for xStocks because of its “unmatched performance, low latency and thriving global ecosystem.” However, the company said it will explore tokenized securities on other networks as well.

“We’re reimagining equities investing and ushering in a new wave of demand from clients seeking better alternatives to the status quo,” Mark Greenberg, Kraken’s global head of consumer, said. “Access to traditional U.S. equities remains slow, costly, and restricted.”

In April, Kraken began offering U.S.-listed stocks and ETFs to U.S.-based customers. The company says it is eyeing similar expansion in the UK, Europe, and Australia. The push comes as the exchange reportedly prepares for an initial public offering this year.

Among traditional financial institutions, tokenization has several backers. In 2022, BlackRock CEO Larry Fink hailed the concept as the future of markets, saying that blockchain-based plumbing could yield near-instantaneous settlement and reduced fees.

In the U.S., firms like Securitize have emerged as leaders in the tokenization space. The company manages BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) fund, which has a market capitalization of around $2.8 billion, according to analytics firm rwa.xyz.

Collapsed crypto exchange FTX waded into the tokenization space in 2020, when it began offering tokenized stocks for marijuana firms. Binance had dabbled in tokenized securities as well, including offering a version of Coinbase’s stock, at one point.

Tokenized stocks have a relatively nascent footprint compared to stablecoins or products like BUIDL. According to rwa.xyz, around $373 million worth of tokenized requites exist on-chain, namely Exodus Movement’s stock, which is issued by Securitize on the Algorand blockchain.

Edited by James Rubin