Kraken Acquires Backed Finance to Expand Tokenized Equities Offering

Kraken Strengthens Position in Tokenized Equities with Backed Finance Acquisition

Kraken, a leading cryptocurrency exchange, has announced its acquisition of Backed Finance AG, the company behind the xStocks issuance platform. This strategic move aims to solidify Kraken's presence in the rapidly evolving digital asset market. The acquisition marks another significant addition to Kraken's portfolio this year, underscoring its ambition to expand and diversify its service offerings.

According to Tuesday's announcement, Kraken plans to deeply integrate xStocks' issuance, trading, and settlement functionalities into its existing product suite, including its global money app. The exchange also intends to broaden support to encompass additional blockchains and markets, thereby enhancing the accessibility and tradability of tokenized assets.

xStocks operates as an innovative platform that issues tokenized versions of publicly traded equities, such as individual stocks and exchange-traded funds (ETFs). Currently, xStocks offers over 60 tokenized products and has recorded a combined exchange and on-chain trading volume exceeding $10 billion since its launch earlier this year.

These tokenized assets operate on the Solana and Ethereum blockchains, facilitating round-the-clock trading. xStocks empowers users with self-custody options and cross-network utilization, granting greater flexibility and control over their investments.

This acquisition follows Kraken's rollout of Backed's xStocks product to eligible European users in September. Kraken also manages the xStocks Alliance, a network comprising partnered chains and trading venues. The exchange anticipates that the acquisition will consolidate this network, fostering enhanced interoperability and liquidity as more markets embrace tokenized equities.

The financial terms of the deal were not disclosed. It's worth noting that Kraken, which confidentially filed for a US IPO in November, has been actively pursuing acquisitions this year. Earlier acquisitions include NinjaTrader in May, followed by proprietary trading platform Breakout in September, and Small Exchange, a designated contract market, in October.

Tokenized Equities Gain Momentum Across Major Platforms

The proliferation of tokenized equities – digital tokens representing ownership of traditional stocks on a blockchain – has emerged as a defining trend in the cryptocurrency space this year. In June, xStocks debuted on Bybit, Kraken, and several Solana-based DeFi platforms, featuring tokenized versions of prominent blue-chip stocks, including Netflix, Meta, Coinbase, Amazon, Nvidia, McDonald's, Apple, Tesla, and Microsoft.

In the same month, Robinhood, a global trading platform, launched a layer-2 blockchain on Arbitrum and introduced tokenized stock trading for European Union users. The platform launched with over 200 US stock and ETF tokens available for trading 24/5 with zero commission fees.

Data from Dune Analytics reveals that Robinhood currently offers 943 tokenized stocks and ETFs on Arbitrum, with a total on-chain value of approximately $10.8 million. RWA.xyz independently tracks approximately $656 million in regulated tokenized public stocks, with a monthly transfer volume of $1.14 billion and roughly 118,000 holders. Among regulated issuers, Ondo holds approximately 52% of the market share, followed by Backed Finance at 24% and Securitize at 20%.