Tokenized Equities Climb to $10 Billion, Putting Regulators in a Legal Gray Area

Kraken’s xStocks platform, developed in collaboration with RWA tokenization company Backed, has exceeded $10 billion in total trading volume a little over four months since its debut, signaling a significant achievement for the tokenized equity market. The service provides digital tokens that are fully backed 1:1 by real shares of publicly listed stocks and ETFs—such as

, , and Meta—and has drawn more than 45,000 onchain participants. Onchain transactions have reached nearly $2 billion, with $135 million in assets currently managed, according to . The platform operates on , , Chain, and , with the goal of connecting traditional financial markets to blockchain by offering round-the-clock trading and fractionalized ownership, as noted.

The swift uptake of tokenized equities has ignited discussions about their legal classification. John Murillo, Chief Business Officer at fintech company B2Broker, pointed out that although xStock tokens reflect the price of the underlying securities, they do not grant actual ownership rights. "Investors possess tokens issued by intermediaries, which could provide payouts if the original shares appreciate or are sold," he explained, as

reported. This nuance places tokenized stocks in a regulatory gray zone, as they are often seen as derivatives rather than direct securities. Despite this ambiguity, data from RWA.xyz indicates there is $666 million in onchain value for tokenized public stocks, not counting trading volume, according to .

Kraken’s prudent strategy stands in contrast to rivals like Robinhood, which recently faced criticism for issuing tokens representing shares in private firms, including OpenAI. Kraken’s co-CEO Arjun Sethi labeled such moves as "terrible ideas," highlighting potential liquidity problems and regulatory hurdles, as

reported. Sethi emphasized in a Financial Times interview that, "Private securities, unlike those traded publicly, are subject to transfer limits and have a smaller pool of buyers." To avoid these issues, Kraken has concentrated on established public stocks, currently listing 60 tokenized assets and planning to reach 1,000, as reported.

The xStocks approach has been likened to platforms such as Securitize, which also tokenizes shares and investment funds, as well as Robinhood’s stock token offerings in certain regions. However, Kraken’s alliance with Swiss custodian Backed Finance and its support for multiple blockchains have helped it stand out in the sector. The platform’s rapid expansion mirrors the wider growth in RWA tokenization, with blockchain analytics firms noting a 300% increase in activity over the past year, as

reported.

Although regulatory certainty is still lacking, the European Union’s MiCA regulation provides some guidance for crypto assets, but equities remain a complex area. Sethi’s perspective highlights the ongoing tension in the industry between innovation and regulatory compliance, as platforms strive to balance ease of access with investor safeguards, as

reported.