Rita Dfouni
- Tokenized trading systems, regulation, and compliance were the topics of Kraken’s meeting with the SEC’s Crypto Task Force.
- With only $360 million in circulation, tokenized stocks still represent a small portion of all tokenized real world assets ($26.5 billion).
- Huge growth potential: According to Binance research, if just 1% of global stocks move onchain, tokenized equities may reach $1.3 trillion.
Exchange of cryptocurrency On August 25, Kraken met with the Crypto Task Force of the U.S. Securities and Exchange Commission (SEC) to talk about its planned tokenized trading system and the regulation of tokenized assets.
The meeting was attended by officials of Kraken Securities LLC, Payward, Inc., and the legal firm Wilmer Cutler Pickering Hale and Dorr LLP, according to a memorandum filed by the SEC. The legal requirements for running tokenized markets, the regulatory framework, and the possible advantages of tokenization in conventional finance were all on the agenda.
Increasing regulatory pressure
The meeting takes place as the SEC is under pressure from exchange organizations and international regulators to take a more stringent stand on tokenized stocks. These organizations contend that tokenized offers lack many of the investor protections seen in traditional equities markets, leaving participants vulnerable.
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The ability of tokenized stocks to be traded around-the-clock, in contrast to regular stocks, raises questions of monitoring, disclosure, and compliance. Aiming to close the gap between cryptocurrency and conventional equity markets, Kraken and Robinhood are two of the few platforms providing such services.
On May 22, Kraken initially introduced its tokenized stock service, which allows investors from outside the US to trade US stocks at any time of day. On June 30, Robinhood followed with its own offering in the EU. The announcement that Kraken would be expanding its operations by selling tokenized equities on the Tron blockchain was made just last week.
Tokenized stocks remain unstable
Tokenized stocks still only make up a small portion of the market, despite increased interest. The entire value of tokenized equities in circulation is $360 million, down 11% over the last 30 days, according to data from RWA.xyz. Only 1.35% of the over $26.5 billion in Real World Assets (RWAs) onchain are represented by this.
However, according to data from Binance, the potential is huge: the market capitalization of the global equity market could reach $1.3 trillion if just 1% of it were tokenized.
According to a new Kraken survey, a poll of 1,000 American investors, 65% of them believe that cryptocurrency would beat stocksin the upcoming ten years. Executives at Kraken contend that tokenized equities can offer new programmability that conventional Wall Street systems cannot match, in addition to accessibility and worldwide reach.
