Leading cryptocurrency exchange Kraken has announced a strategic partnership with fintech firm Backed to launch tokenized US stock trading for non-American clients on the Solana blockchain. This move represents a significant expansion of Kraken's traditional asset offerings through blockchain tokenization.
Service Details and Implementation
- Tokenization Partner: Backed will facilitate the tokenized stock products
Blockchain Selection: Solana was chosen for its:
- Unparalleled performance metrics
- Low latency transactions
- Thriving global ecosystem
- Target Audience: Exclusively available to non-US clients initially
"At cryptocurrency's core is the ability to transparently view transactional activity," stated Arjun Sethi, Kraken's co-CEO, during the Solana Accelerate event on May 22. "The decentralized, open-source nature allows for rapid innovation that established firms like ours can leverage."
Strategic Market Positioning
This development suggests Kraken may be:
- Diversifying beyond direct competition with crypto-only exchanges (e.g., Coinbase)
- Targeting multi-asset platforms like Robinhood
- Expanding into traditional investment products
Previous Milestones
- April 14: Launched ETF/stock trading for US clients in 10 states and DC
- 2021: Binance attempted similar services before regulatory challenges forced discontinuation
The Growing Tokenization Landscape
Tokenized real-world assets (RWA) have seen remarkable growth:
| Metric | January 3 | May 20 | Growth |
|---|---|---|---|
| Market Capitalization | $15.9B | $22.7B | +42.8% |
| Tokenized Stocks | - | $373M | - |
Industry Trends
- Private credit/US treasuries dominate RWA sector
- Robinhood developing dedicated security tokenization blockchain
- European access to US markets being prioritized
Advantages of Tokenization
- Cost Reduction: Minimizes traditional infrastructure dependencies
- Market Democratization: Opens institutional-grade assets to retail investors
- Operational Efficiency: Streamlines settlement processes
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FAQ
Q: Why is Kraken restricting this service to non-US clients?
A: Regulatory compliance requirements differ by jurisdiction, with US securities laws being particularly complex.
Q: How does tokenization benefit stock investors?
A: Tokenization enables fractional ownership, 24/7 trading, and reduced settlement times compared to traditional markets.
Q: What safeguards are in place for tokenized stocks?
A: Backed uses fully collateralized tokens with regular audits to ensure 1:1 asset backing.
Q: Will Kraken expand this service to other assets?
A: The company is building a "microservices system" to progressively expand product offerings.
Q: How does Solana compare to other blockchains for tokenization?
A: Solana offers superior throughput (>2,000 TPS) and low fees (<$0.01 per transaction), making it ideal for financial applications.