The Strategic Case for Tokenized Equities: Kraken and Backed's xStocks as a Gateway to the Future of Capital Markets

Kraken's xStocks: A Catalyst for Institutional Adoption
Kraken's acquisition of Backed Finance AG has positioned xStocks as the leading platform for tokenized equities. Since its 2025 launch, xStocks has achieved $10 billion in combined trading volume within six months, with Q3 2025 alone reaching $5 billion. The platform offers 60 tokenized equities and ETFs, 1:1 backed by underlying assets, and is live on Solana and Ethereum, with integrations on TON, Tron, Mantle, and BNB Chain in development.

xStocks' adoption is fueled by its institutional-grade infrastructure. Kraken's vertically integrated architecture-covering exchange matching, custody, clearing, and wallet services-enables seamless issuance, trading, and settlement. This framework aligns with the next era of market structure, as highlighted by Kraken co-CEO Arjun Sethi. The platform's expansion to the EU in Q3 2025 further underscores its global reach, with 37,000 unique holders and partnerships with Bybit, Phantom, OKX Wallet, and Telegram Wallet.

Financial Performance and Strategic Momentum
Kraken's Q3 2025 financial results underscore the platform's momentum. Revenue surged to $648.0 million, a 50% quarter-over-quarter increase and a 114% year-over-year rise. Adjusted EBITDA hit $178.6 million, up 124% quarter-over-quarter, driven by disciplined cost management and strategic investments in derivatives and custody services. xStocks contributed $5 billion in CEX/DEX volume, with assets on the platform growing 34% to $59.3 billion.

Institutional partnerships have further solidified Kraken's position. The acquisition of Small Exchange, a CFTC-regulated DCM, has expanded Kraken's derivatives offerings, while integrations with Capitalise.ai and Breakout enhance automation and prop trading capabilities. These moves align with the broader trend of blockchain-based systems reducing counterparty risks and improving liquidity management.

Challenges and Opportunities
Despite its progress, tokenized equities face challenges, including regulatory compliance and transaction privacy. However, Kraken's strategic focus on compliance and global access mitigates these risks. For instance, xStocks' availability to non-U.S. investors through the Kraken Consumer App and Pro platform aligns with the EU's evolving regulatory landscape. Additionally, permissionless blockchains-offering universal access and composability-are positioned to become the cornerstone of future payment infrastructure, addressing scalability concerns.

The Investment Thesis
Tokenized equities represent a high-conviction investment theme due to their alignment with macroeconomic trends: institutional demand for fractional ownership, AI-driven efficiency, and blockchain's operational advantages. Kraken's xStocks exemplifies this potential, with its $10 billion trading volume, institutional partnerships, and cross-chain expansion. As the tokenized RWA market grows toward $3 trillion by 2030, platforms that unify issuance, trading, and settlement-like xStocks-will dominate the next era of capital markets.

For investors, the strategic case is clear: tokenized equities are not a speculative fad but a foundational shift in financial infrastructure. Kraken's leadership in this space, supported by its financial performance and ecosystem integrations, positions it as a gateway to the future of capital markets.