On Monday, crypto exchange Kraken held discussions with the US Securities and Exchange Commission’s Crypto Task Force regarding the tokenization of traditional assets and a tokenized trading system.
A memorandum filed on the same day revealed that SEC staff met with four representatives from Payward, Inc., Kraken Securities LLC, and two attorneys from the law firm Wilmer Cutler Pickering Hale and Dorr LLP.
The meeting focused on the tokenized trading system, including its regulatory framework, legal requirements, and the potential advantages of tokenization.
This meeting with the SEC coincided with calls from traditional exchange industry associations and global regulators urging stricter regulations for tokenized stocks.
These associations have pointed out the absence of investor protection measures that are standard in traditional markets.
Tokenized stocks usually escape the limitations of traditional exchanges, allowing for trading around the clock. Kraken and Robinhood prominently provide these services.
On May 22, Kraken launched its tokenized stocks service, permitting non-US investors to purchase US equities at any time.
Robinhood began offering tokenized stocks of US equities to users in the European Union on June 30.
On Wednesday, Kraken announced an expansion of its tokenized stock offerings to the Tron blockchain.
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Tokenized stocks still in early stage
Presently, tokenized stocks are in an early phase of development.
The total market value of all circulating tokenized stocks is currently at $360 million, reflecting an 11% decrease over the past month, according to RWA.xyz.
This constitutes a mere 1.35% of all Real World Assets (RWAs) that have been tokenized, with nearly $26.5 billion worth of RWAs currently onchain.
Binance research suggests that tokenized stocks represent a trillion-dollar opportunity. If 1% of the global equities market gets tokenized, it could drive the sector’s market capitalization beyond $1.3 trillion.
A recent Kraken survey indicated that 65% of 1,000 US investors who engage in both equities and crypto believe that crypto will outperform equities in the next decade.
In July, Mark Greenberg, the global head of Kraken’s Consumer Business Unit, mentioned to Cointelegraph that tokenized stocks are expected to provide enhanced accessibility, programmability, and global reach, rather than simply mirroring the Wall Street system on-chain.
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