Meeting with the SEC
On Monday, representatives from Kraken, including members from Payward, Inc., Kraken Securities LLC, and legal experts from the firm Wilmer Cutler Pickering Hales and Dorr LLP, held a significant meeting with the US Securities and Exchange Commission’s (SEC) Crypto Task Force. The central topic of their discussion revolved around the development of a trading system based on the tokenization of traditional financial assets and the associated regulatory frameworks needed to implement such a system effectively.
Regulatory Concerns
This meeting is crucial, particularly in the context of increasing calls from traditional exchange industry organizations and global regulators for the SEC to adopt a tougher stance on the regulation of tokenized stocks. The primary concern raised is the apparent absence of investor protection mechanisms in the realm of tokenized assets, which do not adhere to the same trading restrictions found in conventional markets. Unlike their traditional counterparts, tokenized stocks can be traded around the clock, with Kraken and Robinhood being the leading platforms facilitating these transactions.
Recent Developments
Kraken made headlines on May 22 by launching its own tokenized stocks service, allowing non-US investors the opportunity to trade US equities at any time. This was soon followed by Robinhood, which began offering similar services to its European users on June 30. Recently, Kraken announced an expansion of its tokenized stock offerings to include the Tron blockchain as well.
Market Overview
Despite these advancements, the market for tokenized stocks remains in its early phases. As of now, the total market cap for all tokenized stocks is approximately $360 million, reflecting an 11% decrease over the last month. This figure constitutes only about 1.35% of the total Real World Assets (RWAs) that have been tokenized, with nearly $26.5 billion worth of RWAs currently active on blockchain platforms.
Future Potential
Research from Binance highlights the potential that tokenized stocks could represent an immense opportunity, with estimates suggesting that if merely 1% of the global equities market transitioned to tokenization, the sector could surpass a $1.3 trillion market cap. A recent survey conducted by Kraken indicated that 65% of 1,000 US investors who engage in both stock and cryptocurrency markets believe that cryptocurrencies will yield better returns than equities over the next decade.
Mark Greenberg, who oversees Kraken’s Consumer Business Unit, previously remarked in an interview with Cointelegraph that the future of tokenized stocks lies in enhancing accessibility and programmability, aiming to extend beyond merely replicating existing financial systems on the blockchain level.
