Crypto exchange Kraken and Swiss tokenization firm Backed announced on Tuesday their collaboration to bring xStocks, a collection of tokenized equities, to the Ethereum network. The goal is to incorporate stocks into decentralized finance (DeFi) infrastructure.
This initiative enables eligible Kraken clients to deposit and withdraw xStocks directly on Ethereum. These tokenized equities will exist as ERC-20 tokens fully backed 1:1 by the underlying stocks. This allows investors to transfer tokenized stocks and ETFs between the exchange and self-custodial wallets while utilizing Ethereum-based DeFi protocols.
The expansion to Ethereum comes after previous xStocks launches on Solana, BNB Chain, and TRON. Since its introduction in June, the product has facilitated over $3.5 billion in combined trading volume across centralized and decentralized exchanges.
With Ethereum being the largest smart contract network, xStocks gains immediate access to thousands of decentralized applications.
\”Our strategic approach of utilizing multiple chains is intentional,\” stated Kraken co-CEO Arjun Sethi. \”It ensures that tokenized equities are accessible across various ecosystems, transferrable between wallets and protocols, and interoperable with the applications that users already rely on. Ethereum is the logical next step.\”
This development coincides with the increasing momentum to tokenize traditional financial instruments, such as equities, on blockchain platforms. Crypto exchanges like Gemini and Robinhood have already introduced tokenized U.S. stocks for EU users. However, concerns surrounding tokenized equity offerings include limited shareholder rights and fragmented regulations.
Read more: Tokenized Stocks Aren’t Working (Yet)
