Talk to the head of Kraken: Make sure any user gets tokenized shares with one click

Editor: Wu said blockchain

In this episode of the podcast, Valentin Gui, head of Kraken's xStocks business, shares his thoughts on stock tokenization. xStocks is a collaborative project involving Kraken, Backed , and Solana to provide global users, especially those without direct access to the stock market, with synthetic exposure based on full collateralization of real stocks.

Valentin recounts how xStocks differentiates itself from competitors like Robinhood, navigates global regulatory challenges, and reveals the platform's future expansion plans. He emphasized the open nature of xStocks — permissionless, multi-chain deployment, and a model that promotes collaboration in the form of alliances, and expressed its long-term vision of becoming part of the Web3 financial infrastructure.

Clarification on xStocks background and token collateralization mechanism

Ehan: Can you tell us about the origins of the xStocks project? Someone in the community has questions about the previous project DAOStack and its failed ICO, can you explain what happened at that time and how it affected xStocks?

Valentin: Absolutely. First of all, I want to clarify that I am the general manager of Kraken's xStocks. We have partnered with Backed, which is the issuer of these tokens. I guess the question you mentioned should refer to a company or project that our partners have been involved in before. However, the core reason why we were attracted to xStocks was that its overall structure was very robust and it had a clear future direction. The initial collaboration was established between Kraken, Backed, and Solana , and now we are expanding this cooperation mechanism to more centralized exchanges and on-chain ecosystems.

One thing we particularly value is that its token issuance model is very rigorous and avoids common risks to the greatest extent. Unlike many tokens, each token of xStocks is fully collateralized 1:1 by real shares, and the underlying stock must be actually purchased and held by the custodian before the token can be issued. We strongly adhere to this "assets first, tokens later" approach because it ensures that each token is backed by real value.

Why stock tokenization: Achieving global financial inclusion with synthetic assets

Ehan: So why did xStocks choose stock tokenization? What problem does it mainly solve?

Valentin: That's a good question. Essentially, what we want to solve is to allow users and investors to access the stock market through on-chain means, especially those who originally did not have access to buy stocks. One of Kraken's missions is to promote global financial inclusion, and we are particularly focused on how to make traditional assets such as the U.S. stock market accessible to more people through tokenization.

Of course, users do not actually buy these stocks, nor do they own the rights to the shares themselves, but gain "synthetic exposure" tied to the performance of these stocks through tokens, that is, they can benefit from stock price fluctuations but do not hold actual shares.

Kraken's layout and partnership with RWA have contributed to the launch of xStocks

Ehan: xStocks has strong support from Kraken, how did this partnership come about? How did it become widely circulated on centralized exchanges and DeFi platforms?

Valentin: This question is also good. I can talk about Kraken in detail because I'm a big part of this collaboration. Kraken has always wanted to get more involved in the RWA (Real World Assets) space and bring these traditional assets on-chain. When evaluating RWAs suitable for tokenization, we targeted equity-like assets – because stocks are globally recognized and familiar to users. But many people don't have a way to buy stocks directly, so we think about whether we can use a "synthetic token" to allow users to get the benefits of stock performance without actually owning the stock itself.

At first, we considered whether to issue tokens directly, but after communicating with several companies, we finally decided to cooperate with Backed because they already have a mature process. Solana also joined us at this stage, and the three of us built a complete framework for cooperation.

A large part of the reason why xStocks is quickly accepted by other centralized and decentralized exchanges is that our partnership mechanism is very open. Kraken is the first centralized exchange to be launched, but other platforms can actually directly sign agreements with Backed and then issue xStocks tokens independently. Kraken has no "privileges", we are just the first participants. This open, alliance-based partnership model is key to xStocks' rapid expansion.

Key differences from Robinhood: openness vs. multi-chain circulation

Ehan: Some people may compare xStocks to established platforms like Robinhood, what are your differences?

Valentin: That's a great question. Robinhood also launched its own stock tokenization product in early July. But the core difference between the two is that xStocks is permissionless, while Robinhood's products are closed.

For example, on Robinhood, you can buy stock tokens, but these tokens can only be used within Robinhood's own platform, cannot be transferred, and cannot be circulated on other chains.

whereas xStocks is completely open-ended. You can keep these tokens yourself and transfer them to any DEX or dApp for use, which can be supported by the entire Web3 ecosystem. And xStocks is deployed on multiple chains — Solana was initially launched, BNB Chain and Injective are coming soon, and we're in talks with several other chains. This means that users can freely use these tokens across chains without platform restrictions.

Not afraid of competition: Binance and Coinbase are welcome to participate together

Ehan: Are you worried about leading platforms like Binance or Coinbase launching similar products?

Valentin: We're not really worried about competition. Frankly, we would rather have them join us in doing this. The reason why we designed this cooperation mechanism is that we hope that participants like Binance and Coinbase can easily join, just negotiate a plan that suits them with our issuing partner, Backed.

We built xStocks as an open, inclusive alliance from the beginning. If they don't want to join, they can choose to do one by themselves, we have no objection. But our doors are always open – and we welcome any organization that wants to participate. We hope to build this ecosystem into an industry standard for more people to benefit.

Solving the liquidity challenges of centralized vs. decentralized exchanges

Ehan: Some people have reported that xStocks does not have enough liquidity on centralized exchanges, how to solve this problem?

Valentin: That's a good question. At Kraken, we have taken liquidity very seriously from the beginning and have prepared a lot. Kraken currently has no significant liquidity issues, mainly due to our strategy in inventory building and asset deployment.

Of course, I've heard that some other DEXs or centralized exchanges do have some challenges in this regard. But we believe that this problem will gradually improve as the entire ecosystem matures. Backed is also taking steps to improve liquidity, although you'll have to ask them for details. But as far as I understand, the Backed team and other exchanges involved in the partnership are actively moving forward with this.

U.S. Regulatory Challenges: How xStocks differs from FTX, Binance's failed attempts

Ehan: Let's talk about the regulatory environment in the United States. What do you think about the current regulatory opportunities and challenges in the United States? For example, did Trump's election and SEC policies affect the promotion of xStocks? Past attempts at tokenized stock like FTX and Binance have failed, what is different about xStocks?

Valentin: That's a very good question. Indeed, the current political and regulatory environment in the United States, especially in the context of the Trump administration, and the SEC's position, have had a big impact on our strategy.

Currently, xStocks is deliberately not available in the United States, which is a joint decision between us and our partners. Because there is currently a lack of a clear regulatory framework in the United States, we do not have the relevant compliance licenses. So Kraken doesn't currently offer this service to users in the US, and the entire product isn't available in the US.

Of course, we are actively communicating with regulators and hope to find a feasible compliance path in the future. But until then, xStocks will not be open in the US market. We don't want to go down the old path of failing due to regulatory issues.

Compliance with securities regulations: xStocks will go live in Europe through a Cypriot entity

Ehan: Hester Peirce mentioned today that any tokenized security must comply with current securities laws. Will this have any impact on xStocks?

Valentin: There will definitely be. Kraken takes compliance very seriously, no matter when it goes live or how it goes live, we take it seriously from a compliance perspective. In Europe, for example, we will launch xStocks in the coming days, but through an entity based in Cyprus.

This entity has been approved by the Cyprus Securities and Exchange Commission (CySEC) and is authorized as a licensed financial intermediary under MiFID II (European Union's Markets in Financial Instruments Directive). As a result, xStocks will be available as a compliant MiFID II product in Europe.

That's why we haven't gone live in the U.S. yet—we don't have a clear regulatory framework or the approvals we need. We will consider launching xStocks in the United States after obtaining all necessary compliance clearances.

Key regulatory challenges: How to define the legal attributes of xStocks

Ehan: So what are the biggest regulatory hurdles facing xStocks right now?

Valentin: The biggest challenge is getting regulators – especially those in Europe and the U.S. – to really understand what xStocks are and how they should be classified.

There are currently three possible classifications: digital assets, debt instruments, and securities. Regulators in different countries may have different understandings and judgments.

Therefore, in every communication with regulators, we must have additional discussions around this classification issue. At the same time, they will also ask a lot of questions about how xStocks works and how to protect investors' rights. Kraken takes this very seriously, and it's a core part of our ongoing dialogue with regulators.

Explore opportunities for pre-IPO equity tokenization

Ehan: Pre-IPO equity is a very exciting area. Does xStocks have any plans to enter this track?

Valentin: This is indeed a direction that we are very interested in and is already actively discussing. I can't give too many details at this time, but we're keeping an eye on relevant opportunities and hopefully have more to share in the coming weeks.

xStocks' 2025 roadmap: global expansion, enhanced token utility, and expanded product offering

Ehan: Can you tell us more about xStocks' next development?

Valentin: Absolutely. One of our key goals this year is to continue to expand our market coverage. xStocks is currently live in Asia, Africa, and Latin America, with a coming soon to Europe, and we hope to make it to the US market by the end of this year. This is one of our top priorities.

At the same time, we are also working to improve the utility of these tokens, such as supporting leveraged trading and allowing users to use these tokens as collateral to participate in financial activities such as lending. This type of function will greatly enrich the user's usage scenarios and make the asset more dynamic.

In addition, we plan to significantly expand the reach of the token. We have about 61 tokens live so far, and we hope to boost that number to a few hundred by the end of the year.

The potential of perpetual contracts and derivatives in tokenized stocks

Ehan: What do you think about launching perpetual contracts for tokenized stocks?

Valentin: This is an area of great interest. When we talk about derivatives, such as leveraged trading and options trading, perpetual contracts will undoubtedly play an important role in this system. This is also one of the directions we are actively exploring this year.

Growth Prospects: Global demand for tokenized stocks drives continued expansion

Ehan: Do you expect significant growth in this market in the future?

Valentin: Absolutely. In fact, the current growth is already very fast. The total market capitalization of global stocks is in the tens of trillions of dollars, and we have observed a strong demand for on-chain exposure to these assets. As we and our partner Backed continue to bring more equity assets on-chain and make them available to users, we expect this space to continue to grow steadily.

Platforms like Robinhood are also starting to enter this track, which in itself speaks to the expanding overall market for tokenized stocks.

Partnerships with Gate.io and potential collaborations on platforms like Hyperliquid

Ehan: Has Gate.io launched a similar product? Do you work with platforms like Hyperliquid?

Valentin: The Gate.io you mentioned, yes, they are now also part of our league. They're already live on xStocks, and we're excited to be a part of this partnership. This is a very important part of our broader market expansion strategy.

As for Hyperliquid, it is not convenient for me to comment specifically at this time. Hopefully, there will be more news available in the coming weeks. We are discussing cooperation with multiple platforms in the entire ecosystem, some of which are still in the negotiation stage or have not yet been officially launched, so I will not name them until they are officially confirmed.

Explore potential collaborations with the Trump family project

Ehan: Will the Trump family's projects be involved in stock tokenization? Have you communicated or discussed with them?

Valentin: We did have some communication, and there is some work going on in this direction at the moment. While there are no new developments that can be made public yet, we know that they are interested in exploring the field of tokenization.

IPO and token offering: Possible paths for Backed's future development

Ehan: Looking ahead, is xStocks more inclined to issue tokens on its own, or will it go down the traditional IPO path?

Valentin: I think xStocks — more precisely, Backed as an issuer — will most likely take the traditional IPO path. But this question is actually more appropriate to ask the Backed team directly, and I will make sure they have the opportunity to respond to this topic later.

Will tokenized stocks replace traditional stocks?

Ehan: Do you think stock tokenization has the potential to completely replace the traditional stock market in the future?

Valentin: I don't think it will completely replace the traditional stock market. Traditional stocks still have a lot of important use cases — at least from Kraken's point of view. What makes us excited about xStocks and tokenized stocks is that they can complement traditional stocks and provide investors with a more complete and richer product portfolio and ways to use them, which is what makes this track really exciting.

Is it possible for tokenized stocks to replace traditional stocks entirely? Maybe, but the more likely scenario is that the two merge to form a completely new form that combines the advantages of both models.

Expanding Beyond the US: Exploring the tokenization of Hong Kong and Chinese stock markets

Ehan: Is it possible to launch products other than US stocks in the future, such as Hong Kong stocks or Chinese stocks?

Valentin: Of course it can. We've already had discussions with the Backed team on this topic. As long as they can access the underlying stocks in a compliant and transparent manner, there are no technical barriers preventing us from listing stocks from Hong Kong, China or other markets.

Building a Cross-Chain Ecosystem: Enhancing the utility of tokenized stocks

Ehan: Is there anything else you'd like to share with our audience?

Valentin: Of course there is. What we're most excited about right now is the future potential of xStocks. Like I said before, Kraken is a partner in this project, and we are actively supporting Backed, Solana, and other upcoming blockchain networks. At the same time, we are also promoting more centralized exchanges to join the cooperation, hoping that xStocks will become one of the industry standards in the field of tokenized stocks.

Once this standard is established, we will be able to provide investors and users with the best liquidity and seamless experience across chains and exchanges. This is why we have adopted an alliance and open cooperation model from the beginning.

More tokenized stocks will be launched in the future, and we will continue to explore new use cases to improve the use cases of these tokens. As application scenarios expand, demand will also grow.

The key to driving mass adoption of tokenized stocks: accessibility

Ehan: Looking ahead to the next two or three years, what do you think is the biggest driver for the mass adoption of tokenized stocks?

Valentin: I think the key is "accessibility" — to make sure that any user can access tokenized shares with one click. What excites us about tokenized stocks is that everyone already has a basic understanding of "stocks", even if they are not deep users in the crypto circle. And when you tell them that this is actually a tokenized mapping of a U.S. stock that can provide synthetic returns linked to the stock's performance, they will quickly understand.

We believe that lowering the barrier to access and increasing the availability of token shares will bring more users into the crypto world, thereby expanding the entire market. Therefore, from driving the popularity of token stocks to boosting the growth of the entire crypto industry, "accessibility" will be the core driver.

Long-term vision: xStocks will become the underlying infrastructure of Web3 finance

Ehan: What is your long-term vision for xStocks? Is it more of an infrastructure for the entire Web3 financial system, or a retail user-centric product?

Valentin: We do position it as the infrastructure of the financial services system. At Kraken, we don't strictly distinguish between traditional and tokenized stocks when planning our roadmap for the future — we offer both. Our focus is on how to combine the two to deliver new and valuable experiences to end users.

In many cases, we believe that tokenized stocks will gradually become the default way for users to gain exposure to US stocks or international equity. This is exactly the path xStocks is taking towards infrastructure – from the perspective of users, they no longer even care whether they hold token editions or traditional stocks.

Of course, we must also be cautious. Currently, tokenized stocks do not give users ownership of the underlying stocks, but from a utility perspective, tokenized stocks have many unique advantages that make them so attractive.

Market perception misconception: underestimating the global demand and market size of tokenized stocks

Ehan: What do you think is the biggest misconception that most people — even some VCs — have about tokenized stocks?

Valentin: I think they underestimated how big the market could be. From my observations in the United States, many investors, especially those in the United States or the Western Hemisphere, are not really aware of the strong demand for global exposure to equities. There are a large number of users around the world who are eager to invest in US stocks or other international market stocks.

Tokenized stocks provide a new path for these users to earn the benefits of related performance in the form of synthetic assets. This potential is currently overlooked by many people. In fact, the market demand is much broader and deeper than they think.

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