Tokenized stocks are technically feasible but face challenges in compliance, asset custody, and market acceptance.
On May 22, cryptocurrency exchange Kraken announced a partnership with Backed Finance to launch "xStocks," a tokenized stock and ETF trading service. The initial offering includes over 50 U.S.-listed stocks and ETFs, such as Apple, Tesla, and Nvidia. This move accelerates the fusion of blockchain technology with traditional finance, positioning crypto exchanges as pioneers in this transformation.
Strategic Expansion
Founded in 2011, Kraken is one of the oldest and most reputable cryptocurrency exchanges, known for its security and compliance. In 2024, Kraken acquired futures trading platform NinjaTrader and expanded its services to include traditional trading of 11,000+ U.S. stocks and ETFs in select states.
Tokenized stocks digitize traditional equities or ETFs via blockchain, enabling 24/7 trading and fractional ownership. Kraken’s xStocks, built on Solana, targets non-U.S. clients across Europe, Latin America, Africa, and Asia. Backed Finance ensures 1:1 asset backing and redeemability.
This trend isn’t isolated. In 2025, exchanges like Bybit began supporting USDT-denominated trading for 78 global stocks, including Microsoft and Coca-Cola, offering low barriers and high liquidity.
👉 Explore Kraken’s latest tokenized stock offerings
Lessons from FTX and Binance
Tokenized stocks aren’t new. FTX (2019–2022) pioneered them, offering fractional shares of Tesla and Apple, but collapsed due to fraud. Binance (2021) faced regulatory pushback and discontinued its service. These cases highlight compliance and custody challenges Kraken aims to overcome.
Why Exchanges Embrace Tokenized Stocks
- Market Access: Targets traditional investors in emerging markets.
- Tech Advantages: 24/7 trading, instant settlement, and fractional ownership.
- Competitive Edge: Integrates with DeFi, enhancing asset utility.
👉 How tokenization bridges crypto and traditional finance
Impact on Traditional Exchanges
Tokenization challenges traditional trading hours and fees but also spurs innovation. Nasdaq’s blockchain experiments hint at future collaborations or upgrades.
Conclusion
Tokenized stocks reflect blockchain’s disruptive potential in finance. For investors, they offer flexibility; for exchanges, a strategic tool; for traditional markets, a catalyst for evolution. However, widespread adoption hinges on resolving regulatory and technical hurdles.
FAQ
1. What are tokenized stocks?
Digitized equities traded on blockchain, enabling fractional ownership and 24/7 trading.
2. Why did FTX’s tokenized stocks fail?
Fraud and compliance issues led to its collapse in 2022.
3. How does Kraken ensure asset safety?
Via Backed Finance’s 1:1 custody and regulatory adherence.
4. Can U.S. investors use xStocks?
Currently, it’s available only to non-U.S. clients.
5. What’s the advantage over traditional brokers?
Lower fees, no trading hours, and global access.
6. Will traditional exchanges adopt tokenization?
Likely, as seen with Nasdaq’s blockchain trials.