A recent meeting between Kraken and the SEC raises important regulatory questions about tokenized stocks that could significantly alter the investment landscape.
Why the SEC Cares About Tokenized Stocks
Tokenized equities allow investors to trade shares around the clock, sidestepping the restrictions of conventional exchanges. Advocates argue this could open markets globally, but critics warn it may strip away essential investor protections. Industry associations have urged U.S. regulators to adopt a tougher stance, concerned that these products resemble unregulated securities more than traditional stocks.
Kraken's Strategy on Tokenized Stocks
Kraken rolled out tokenized stocks in May, initially for non-U.S. users, before expanding the service to run on the Tron blockchain this week. Robinhood followed with a similar launch in Europe, signaling that competition is building in this segment. At just $360 million in circulation, tokenized stocks represent a fraction of the $26.5 billion in tokenized real-world assets, yet exchanges are betting that the sector could eventually scale into the trillions.
The Potential of Tokenized Stocks in the Global Market
Binance researchers estimate that if even 1% of the global equities market migrated on-chain, tokenized stocks could surpass $1.3 trillion. Kraken's own survey suggests that 65% of respondents who own both crypto and equities expect digital assets to outperform traditional stocks over the next decade.
The discussion around tokenized stocks attracts interest from both investors and regulators. As the market continues to evolve, a clearer understanding of the regulatory aspects of this new concept is essential.
