Kraken Expands Tokenized US Stocks to Ethereum with xStocks

Cryptocurrency exchange Kraken has recently made a significant move by expanding its offering to include tokenized versions of U.S. stocks on Ethereum mainnet through xStocks, a product developed by Backed. This expansion now allows for 24/7 trading of equities like Apple, Tesla, and Nvidia, as well as exchange-traded funds (ETFs) on Ethereum, the largest blockchain in the decentralized finance (DeFi) space with close to $107 billion in total value locked (TVL) across various protocols, according to DefiLlama. Kraken’s eligible clients, particularly non-U.S. traders, can now deposit and withdraw xStocks directly on Ethereum. Backed will issue xStocks as ERC-20 tokens, ensuring that each equity listed on Kraken’s platform is fully collateralized at a 1:1 ratio, as outlined in a blog post on Kraken’s website.

This latest integration makes Ethereum the fourth blockchain network where Kraken is offering xStocks, following existing availability on Solana, Tron, and BNB Chain. Roberto Klein, co-founder of Backed, expressed excitement about tapping into Ethereum’s vast liquidity pool and connecting with well-established DeFi protocols through xStocks, emphasizing the product’s composability. He looks forward to collaborating with various teams to further develop the potential of xStocks in the DeFi space.

Kraken, a prominent U.S.-based centralized exchange (CEX), reported revenue of $1.5 billion and a trading volume of $664 billion in 2024. While the exchange has seen approximately $1.3 billion in trading volume in the last 24 hours, it still lags behind competitors like Coinbase, which recorded $3.2 billion in trading volume during the same period, according to data from CoinGecko. Despite its substantial revenue and trading volume, xStocks figures have yet to catch up with decentralized exchanges on other blockchain networks.

xStocks recently reached a milestone by exceeding $500 million in on-chain transaction volume just under two months after its public launch. Although this achievement is a positive indicator of the growing interest in tokenized stocks, some experts caution that the figure may be more symbolic than substantial. Doug Colkitt, a key contributor to Fogo, pointed out that while $500 million is significant, it pales in comparison to the trading volume seen on Solana DEXes in a single afternoon. Indeed, decentralized exchange platforms like Meteora, Raydium, and Orca have recorded millions in trading volume over the past 24 hours, according to DefiLlama.

Despite this, Tom Bruni, editor and VP of Stocktwits, considers the milestone a significant proof-of-concept and a positive signal for developers working in the tokenized equities space. The tokenization of assets like xStocks on Ethereum and its integration into DeFi protocols offer new opportunities for traders and investors to access traditional markets in a decentralized manner, underscoring the ongoing evolution of the financial landscape within the blockchain ecosystem.