On Monday, crypto exchange Kraken met with the U.S. Securities and Exchange Commission’s (SEC) Crypto Task Force to discuss the tokenization of traditional assets and the development of a tokenized trading system.
According to a memorandum filed the same day, SEC staff met with four representatives from Payward, Inc. and Kraken Securities LLC, as well as two representatives from the law firm WilmerHale.
The meeting focused on the tokenized trading system, the applicable regulatory framework and legal requirements for its operation, and the potential advantages of tokenization.
Kraken’s meeting with the SEC comes amid calls from traditional exchange industry groups and global regulators for stricter oversight of tokenized stocks.
These associations have raised concerns that tokenized stocks lack the investor protection safeguards found in traditional markets. Unlike conventional equities, tokenized stocks are not subject to standard market restrictions and can be traded around the clock. Kraken and Robinhood are currently the most prominent platforms offering these services.
Kraken launched its tokenized stocks service on May 22, allowing non-U.S. investors to trade U.S. equities 24/7. Robinhood followed on June 30, making U.S. tokenized stocks available to users in the European Union.
Most recently, on Wednesday, Kraken announced that it had expanded its tokenized stock offerings to the Tron blockchain.
Tokenized stocks remain in the early stages of development
Tokenized stocks are still in the early stages of development.
According to RWA.xyz, the total value of all tokenized stocks currently stands at $360 million, down 11% over the past 30 days. This accounts for just 1.35% of all tokenized Real World Assets (RWAs), with nearly $26.5 billion in RWAs currently on-chain.
Research from Binance suggests that tokenized stocks represent a potential trillion-dollar market. If just 1% of the global equities market were tokenized, the sector could surpass $1.3 trillion in market capitalization.
A survey conducted by Kraken last week found that 65% of 1,000 U.S. investors who hold both equities and crypto expect crypto to outperform traditional stocks over the next decade.
In July, Mark Greenberg, global head of Kraken’s Consumer Business Unit, told Cointelegraph that tokenized stocks should provide enhanced accessibility, programmability, and global reach, rather than merely replicating the traditional Wall Street system on-chain.
