Payward, the parent company of Kraken, has broadened its offerings in tokenized stocks significantly. The xStocks platform now features over 200 stocks from the UK and Europe, with total assets surpassing $1.1 billion, marking a substantial growth in availability and investment options for crypto enthusiasts.
Expanding Beyond US Borders
This expansion represents a strategic pivot for Kraken, which previously concentrated mainly on US-listed stocks. The updated selection includes all 40 companies from Germany’s prominent DAX index, such as SAP, Siemens, and Allianz. Additionally, numerous well-known firms listed in the UK and the EU have been integrated, providing a unique opportunity for crypto investors to gain exposure to Europe’s major corporations via blockchain-supported tokens.
Taking the form of xStock tokens, each is fully collateralized by the corresponding underlying stock, although it does not grant holders any ownership rights typically associated with shareholders, such as voting privileges. Instead, these tokens offer economic exposure to the performance of the underlying shares.
Investment Accessibility Challenges
Despite this European expansion, the xStocks offerings remain unavailable to investors in the UK and US markets. Access is limited to investors in designated regions outside these territories.
This move follows a recent collaboration between Payward and the London Stock Exchange Group aimed at tokenizing the 100 largest listed companies on the LSE. This initiative will be executed on the LSE 24 platform and is anticipated to launch in 2027, pending regulatory approval.
The xStocks model employs a traditional 1:1 backed wrapper or tracker certificate structure. This involves the purchase and holding of actual shares under regulated custody, from which tokens are minted on a 1:1 basis. Token holders benefit from price exposure and self-custody but do not attain legal ownership of the shares.
The Rise of Tokenized Stocks
The crossing of the $1.1 billion asset milestone underscores the increasing interest in gaining access to traditional equities through blockchain technology. Tokenized shares provide advantages such as around-the-clock trading, fractional ownership, and settlement processes using blockchain, appealing to crypto investors looking for diversification without moving out of the digital asset landscape.
This significant addition of DAX-listed companies positions Kraken’s xStocks as a competitive global product, enabling users to consolidate their tracking of Germany’s leading companies on one centralized platform.
Actual shares are managed by regulated custodians, separate from the assets of Kraken or any of its token holders.
The primary custodian for US stocks is Alpaca Securities LLC, which is a FINRA-regulated entity and a member of SIPC, while additional coverage is provided by Lloyd’s of London for up to $175 million, per some disclosures. For UK and EU shares, custody operations will rely on a partnership between Payward and GTN, a multi-jurisdictional securities infrastructure provider, ensuring shares are maintained in segregated accounts remote from the assets of Kraken or the issuing companies.
Future Directions
Further expansions will likely hinge on regulatory updates, especially regarding the planned connection with the London Stock Exchange. As the trend of tokenizing real-world assets progresses, platforms that can effectively bridge the gap between traditional markets and crypto frameworks are expected to attract more attention from both individual and institutional investors.
The inclusion of over 200 stocks from the UK and EU marks one of the largest expansions of tokenized equity products to date, representing a significant step in Kraken’s aspirations beyond mere cryptocurrency trading.
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