On Monday, crypto exchange Kraken met with the US Securities and Exchange Commission’s Crypto Task Force to explore the tokenization of traditional assets and a tokenized trading system.
A memorandum submitted on the same day indicated that SEC staff engaged with four representatives from Payward, Inc., Kraken Securities LLC, and two from the law firm Wilmer Cutler Pickering Hale and Dorr LLP.
The primary focus was to discuss the tokenized trading system, regulatory frameworks, legal requirements, and potential benefits of tokenization.
The SEC memo confirms the meeting with Kraken took place on Monday. Source: The SEC.
This meeting with Kraken comes as traditional exchange industry associations and global regulators push for a more rigorous regulatory stance towards tokenized stocks.
These associations argue that investor protection measures available in conventional markets are notably absent.
Tokenized stocks are generally not subjected to traditional market restrictions and can be traded continuously. Kraken and Robinhood are the two leading platforms providing these services.
On May 22, Kraken unveiled its tokenized stock service, allowing non-US investors to trade US equities around the clock.
Robinhood commenced offering tokenized stocks of US equities to EU users 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
At present, tokenized stocks are in their early growth phase.
The total market value of all tokenized stocks currently stands at $360 million, reflecting an 11% decline over the past month, as reported by RWA.xyz.
This constitutes just 1.35% of all Real World Assets (RWAs) that have been tokenized, with nearly $26.5 billion in RWAs currently on-chain.
Research from Binance suggests that tokenized stocks represent a trillion-dollar opportunity. If 1% of the global equities market becomes tokenized, it could push 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 anticipate that crypto will outperform equities over the next ten years.
In July, Mark Greenberg, global head of Kraken’s Consumer Business Unit, stated to Cointelegraph that tokenized stocks should enhance accessibility, programmability, and global reach rather than merely replicating the Wall Street model on-chain.
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