Crypto exchange Kraken has initiated discussions with the U.S. Securities and Exchange Commission (SEC) regarding tokenization and trading system legality, emphasizing growing regulatory scrutiny in this area.
Kraken Meets With SEC Officials
The recent meeting focused on Kraken's tokenized trading system and applicable legal requirements. According to a memorandum, four representatives from Payward, Inc. and Kraken Securities LLC were involved, along with two attorneys from Wilmer Cutler Pickering Hale and Dorr LLP. The discussions occurred amid increasing pressure on the SEC from traditional exchange associations regarding the inadequacies of investor protections in tokenized offerings.
Tokenized Stocks Under Spotlight
Tokenized stocks allow investors to purchase blockchain-based versions of equities, enabling 24/7 trading beyond traditional constraints. Kraken launched its tokenized stocks on May 22, followed by Robinhood's similar service in the European Union shortly after. Recently, Kraken announced that its tokenized stock offerings are now available on the Tron blockchain, enhancing access for a broader user base.
Market Potential and Investor Sentiment
Kraken's data shows rising optimism toward tokenization. A survey of 1,000 active investors reveals that 65% expect crypto to outperform equities over the next decade. While tokenized stocks are in early development, research suggests vast long-term potential; even 1% of the global equities market tokenized could push the sector beyond $1.3 trillion in market capitalization.
Kraken's discussions with the SEC highlight the need for a balanced regulatory approach in fostering innovation in tokenized markets while ensuring investor protections are upheld. The potential for tokenization remains significant, and the future of regulation in this area may influence the development at the intersection of traditional finance and blockchain.
