Kraken Launches On-Chain Trading for 60 US Stocks Excluding US Customers

Kraken has launched a new market for on-chain trading of tokenized US equities, offering access to 60 US stocks for international traders. This move, however, excludes US customers from participating in the tokenized securities market. The exchange has partnered with BackedFi to create XStocks, which are fully composable within the Web3 ecosystem, allowing for the use of bots, AI trading, and other forms of transfers, swaps, or deposits.

The tokenized stocks are not available in Canada, Australia, the EU, the UK, and all generally prohibited regions. The launch follows a previous partnership with BackedFi to launch tokenized stocks on Solana, with the first trades now live and also available through the Bybit exchange. XStocks will carry some of the top US tech stocks, including GOOG, NVDA, MSFT, and others. The tokenized stocks will be divisible, allowing investments with any amount of deposit, as low as $1. Stock trading will be accessible through fiat, crypto, or stablecoins.

The biggest breakthrough for tokenized shares would be access to the entire Solana ecosystem, including DeFi lending. The XStocks tokens will be transferable and tradable, with no restrictions on being used in DeFi protocols. Kamino Lend, the growing Solana lending platform, announced it would accept XStocks as collateral.

Kraken’s offer is currently one of the widest on the market. Platforms are generally cautious when tokenizing shares, due to potential regulatory limitations. Globally, only around $651M in shares have been tokenized, lagging behind tokenized debt, bonds and even commodities. There is also no general standard on stock tokenization, with offers ranging from special tokens to common crypto assets only bearing the name of the stock.

XStocks are backed 1:1 by the underlying asset, and can be transferred online. However, the Solana-based tokens themselves do not bring the same rights as ownership of the official shares. XStocks owners cannot vote or receive a dividend, essentially making the token issuer the official owner. However, for the purposes of globalized trading and investment, XStocks offers exposure to multiple US equities without additional regulatory burdens.

Kraken and other tokenized stock issuers are tapping the trend of demand for US equities. The expansion of the tech sector, AI, and general economic recovery have driven international buyers to US shares. Foreign direct investments in US equities retained a long-running expansion trend for the past three years, based on demand for assets to compensate for inflation.