Kraken, a prominent U.S. cryptocurrency exchange, has announced its acquisition of Backed Finance AG, a platform that specializes in tokenized assets, as part of its strategy to expand its presence in the tokenization sector. Based in Cheyenne, Wyoming, Kraken stated that this acquisition would enhance the global adoption of xStocks—securities that are already traded on traditional markets but now made accessible on blockchain networks. This move is part of Kraken's ongoing collaboration with Backed to provide tokenized stocks and ETFs to its users via platforms like Ethereum and Solana.
The process of tokenization involves taking tangible assets and representing them digitally on blockchain networks. Arjun Sethi, co-CEO of Kraken, emphasized the significance of integrating Backed into Kraken's operations. He highlighted that this integration would bolster the essential architecture for open and programmable capital markets. By unifying issuance, trading, and settlement within a single framework, Kraken aims to ensure that the infrastructure for tokenized assets remains transparent, dependable, and accessible worldwide. This development is seen as a foundational step towards the future evolution of market structures.
While Kraken did not disclose the financial details of the acquisition, this buyout is part of a series of acquisitions the company has made throughout the year in preparation for going public. In September, Kraken acquired Breakout, a proprietary trading platform, for an undisclosed sum and earlier in the year, it purchased the futures trading platform NinjaTrader for $1.5 billion.
Sethi has previously criticized the outdated nature of traditional financial systems, which he described as operating on mid-20th-century technology. Kraken's ambition is to transform into an institutional-grade trading platform where various assets can be traded at any time. He further explained that this recent acquisition is not just about offering exposure to U.S. equities but is aimed at redefining asset ownership in the digital age.
The interest in tokenization from traditional finance firms has been growing. Notably, Larry Fink from BlackRock has often discussed its potential to revolutionize capital markets, and BlackRock now offers a tokenized money-market fund. Additionally, Franklin Templeton, a major Wall Street firm, has been involved in the tokenization of assets across several blockchains for some time.