Kraken Acquires Backed Finance: Scaling Tokenized Stocks and Bridging TradFi with Crypto Kraken’s acquisition of Backed Finance AG marks a decisive step in the institutionalization of tokenized real‑world assets (RWAs) and the convergence of tradition

Kraken’s acquisition of Backed Finance AG marks a decisive step in the institutionalization of tokenized real-world assets (RWAs) and the convergence of traditional capital markets with blockchain infrastructure. Announced on December 2, 2025, the deal brings under one roof the issuance, trading, and settlement stack behind xStocks, the fast-growing tokenized equities product jointly developed by Kraken and Backed.

In just 135 days since its late-June 2025 launch, xStocks surpassed $10 billion in combined centralized and decentralized trading volume, with more than 60 tokenized stocks and ETFs and tens of thousands of on-chain holders. By moving from partnership to full ownership, Kraken is positioning itself as a vertically integrated venue for tokenized securities just as the broader RWA market is scaling from niche experiments to tens of billions of dollars in value.

1. Strategic Context: Why Kraken Is Buying Backed Now

1.1 From stablecoins to tokenized securities

Backed Finance, founded in 2021 by Adam Levi, Roberto Gomez Vilchis, and Yehonatan Harchuel, started from a simple insight: stablecoins proved fiat currencies could live natively on blockchain rails; the next step was to bring other real-world assets-especially stocks and ETFs-on-chain in a compliant, institution-ready form.

Backed’s model is conceptually simple and operationally demanding:

• Issue fully collateralized tokens that represent claims on traditional securities.
• Hold the underlying assets 1:1 in segregated custody accounts with regulated third parties.
• Wrap the structure in a robust regulatory framework (prospectuses, licensing, oversight) so the tokens are acceptable to sophisticated retail users and institutions.

Between 2021 and 2024, Backed assembled the legal, custody, and technical plumbing to make this work: broker and custodian relationships, EU-compliant prospectus filings, and a Jersey-regulated issuing vehicle. The inflection point came in mid-2025, when Backed partnered with Kraken and Bybit to launch xStocks-tokenized representations of major U.S. equities and ETFs such as Tesla, Apple, Microsoft, Nvidia, and the S&P 500 ETF.

1.2 Kraken’s evolution into a full-stack market infrastructure provider

Founded in 2011 as a crypto exchange, Kraken has been steadily remaking itself into a globally scaled and regulated market infrastructure stack spanning spot, derivatives, equities, tokenized assets, staking, and payments. Its 2025 acquisition spree makes the strategy clear:

• NinjaTrader (March 2025, $1.5 billion) – added a futures and FX trading platform.
• Breakout (September 2025) – brought in a proprietary trading platform.
• Small Exchange (from IG Group, $100 million) – secured CFTC licensing for U.S. derivatives.

Each acquisition added a piece of traditional market structure: matching engines, clearing, regulatory licenses, and professional trading tools. Buying Backed extends this vertical integration into tokenized RWAs, and specifically tokenized equities.

Kraken co-CEO Arjun Sethi has framed the thesis explicitly: integrating Backed strengthens the core architecture for open, programmable capital markets by unifying issuance, trading, and settlement of tokenized assets in one framework. The aim is not just to provide exposure to U.S. equities, but to redefine asset ownership in a digital era-programmable, 24/7, and globally accessible.

1.3 Timing: capital raise, IPO plans, and consolidation

The deal also fits Kraken’s funding and capital-markets timeline. In November 2025, Kraken closed an $800 million funding round at a $20 billion valuation, up from $15 billion just two months earlier. The round was led by institutional investors including Jane Street, DRW Venture Capital, HSG, Oppenheimer Alternative Investment Management, and Tribe Capital, with a notable $200 million investment by Citadel Securities at the same valuation.

Citadel Securities’ participation is strategically meaningful. As one of the most influential market structure firms globally, its backing signals confidence in Kraken’s infrastructure ambitions and brings deep expertise in liquidity provision, risk management, and market microstructure.

Soon after the raise, Kraken confidentially filed a draft registration statement with the U.S. SEC, targeting an IPO in Q1 2026. Completing the Backed acquisition before going public allows Kraken to present itself to public market investors as a fully integrated infrastructure provider with direct control over the issuance and lifecycle of tokenized securities, rather than as an exchange dependent on third-party issuers.

2. xStocks: Product Design, Performance, and Market Fit

xStocks is the operational expression of Backed’s tokenization stack combined with Kraken’s distribution and trading infrastructure. Its design and early traction are central to understanding the acquisition.

2.1 Product structure: fully collateralized tokenized equities

Each xStock is a tokenized representation of a specific stock or ETF:

• A Tesla xStock (TSLAx) is backed 1:1 by Tesla shares.
• An Apple xStock (AAPLx) is backed by Apple shares.
• An S&P 500 ETF xStock (SPYx) is backed by units of the SPY ETF, and so on.

Key structural components:

1. Issuing vehicle and regulation
   xStocks are issued by Backed Assets (JE) Limited, a special purpose vehicle domiciled in Jersey and regulated by the Jersey Financial Services Commission. The products are structured as tracker certificates or similar securities, with EU-compliant prospectuses filed with the Liechtenstein Financial Market Authority. This anchors xStocks in established securities law, including formal disclosures and regulatory oversight.

2. Collateralization and custody
   For each token, the underlying securities are held 1:1 in segregated custody accounts at regulated custodians and/or brokers. These accounts are bankruptcy-remote and denominated in the underlying assets. An independent security agent has viewing rights and can assume control if token holders’ rights are not respected, adding an extra layer of governance and investor protection.

3. On-chain representation
   Tokens are issued on public blockchains. xStocks launched on Solana and later expanded to Ethereum, with plans to support additional networks including TON, Tron, Mantle, and BNB Chain. The multi-chain design aims to meet users where liquidity and DeFi integrations are strongest, while maintaining a single off-chain collateral pool per asset.

4. Access and exclusions
   xStocks are available in more than 160 countries but explicitly not offered to U.S. persons, reflecting unresolved questions about how U.S. regulators would treat such products. The geo-fencing underscores that the current comfort zone is European and international, not American.

Because each token is fully backed by the underlying security, xStocks resemble tokenized certificates or depositary receipts more than synthetic derivatives, leveraged contracts, or cash-settled CFDs. Kraken leans heavily on this distinction in positioning xStocks as a form of mediated but real asset ownership rather than purely synthetic exposure.

2.2 Early metrics: volume, users, and asset coverage

Early performance has been strong:

• Trading volume
  Within 135 days of launch in late June 2025, xStocks reached $10 billion in combined centralized and decentralized exchange volume.
  – Around $8 billion came from centralized exchanges (primarily Kraken and Bybit).
  – Nearly $2 billion came from on-chain decentralized exchange activity.

• User base and AUM
  As of November 2025, xStocks had more than 45,000 unique on-chain holders and over $135 million in aggregated assets under management.

• Asset universe
  The platform offers more than 60 tokenized equities and ETFs, including Tesla (TSLAx), Apple (AAPLx), Nvidia (NVDAx), MicroStrategy (MSTRx), and major ETFs like SPYx, spanning large-cap tech and broad market exposures.

• Geographic reach
  Availability in 160+ countries highlights demand for equity exposure via blockchain rails, especially in jurisdictions where direct access to U.S. markets is limited or operationally difficult.

Compared with other RWA categories, the speed of adoption stands out. Large tokenized money market funds, such as BlackRock’s BUIDL, took longer to reach similar volumes despite brand strength and institutional client bases. A newer and more complex category like tokenized equities reaching $10 billion in under five months suggests strong product–market fit at the intersection of crypto-native traders and global investors seeking more flexible equity access.

2.3 24/7 trading and the “always-on” equity market

xStocks’ trading cadence is a key differentiator:

• On Kraken’s centralized platform, xStocks trade 24/5, unconstrained by U.S. equity market hours.
• On-chain, xStocks trade 24/7/365, with DEXs and liquidity pools enabling continuous price discovery and risk transfer.

Traditional equities remain tied to the 9:30 a.m.–4:00 p.m. Eastern Time window, with only limited pre-market and after-hours sessions. For global traders and risk desks, that creates gaps when major news breaks outside market hours.

With xStocks:

• Traders can hedge or adjust exposure after earnings or macro events before the next U.S. cash-session open.
• xStocks can serve as proxies for directional equity or macro bets around the clock.
• Tokenized equities can plug into DeFi strategies as collateral or yield-bearing assets in protocols that never close.

This continuous trading model challenges the assumption that equities must be bound to specific exchange hours and points toward a more global, always-on model of price discovery.

3. Kraken’s Vertically Integrated Tokenization Stack

The Backed acquisition is best seen as the capstone in Kraken’s effort to build a vertically integrated tokenization stack spanning issuance, custody, trading, settlement, and market data.

3.1 Traditional vs. vertically integrated market structure

In traditional finance, a security’s lifecycle typically involves a chain of distinct entities:

• Issuer (corporation or ETF sponsor)
• Registrar and transfer agent
• Primary listing exchange
• Clearinghouses and central securities depositories
• Custodian banks
• Broker-dealers and market makers
• Data vendors

Each handoff adds latency, operational risk, and cost. Settlement cycles like T+2 reflect the need to reconcile positions across multiple ledgers and institutions.

Kraken’s model compresses this stack:

• Issuance of tokenized securities via Backed’s regulated vehicles
• Custody and settlement integrated into Kraken’s infrastructure and on-chain rails
• Trading on Kraken’s centralized exchange and on-chain venues
• Market data and risk systems consolidated in a unified architecture

Owning these layers allows Kraken to:

• Launch new products faster
• Improve capital efficiency by reducing intermediaries
• Lower operational risk by cutting reconciliation points
• Capture more economics across the product lifecycle

3.2 What Kraken gains from acquiring Backed

Before the deal, Kraken depended on Backed as an external issuer and infrastructure provider for xStocks. The acquisition pulls several critical functions in-house:

1. Issuance and legal framework
   Kraken now owns the legal entities and regulatory permissions Backed assembled: Jersey registration, EU prospectus approvals, and relationships with custodians and brokers. That shortens product launch cycles and gives Kraken tighter control over compliance and structuring.

2. Technical infrastructure
   Backed’s tokenization platform-smart contracts, issuance logic, reconciliation systems-becomes native to Kraken’s architecture. Deeper integration with matching engines, wallets, and risk systems enables unified monitoring of collateral and token supply.

3. Team and expertise
   The Backed team brings specialized knowledge in securities law, cross-border structuring, and on-chain/off-chain reconciliation-skills that are slow and costly to build from scratch.

4. Brand and ecosystem
   xStocks already has traction across centralized and decentralized markets, with growing network effects. Kraken now controls the brand and can directly steer its multi-chain and ecosystem roadmap.

Kraken thus shifts from a distribution partner to an end-to-end issuer, operator, and venue for tokenized equities.

3.3 Fit with Kraken’s institutional strategy and Citadel Securities

The deal also ties into Kraken’s institutional push and its relationship with Citadel Securities. Citadel’s $200 million investment and collaboration on liquidity and market structure contribute:

• Advanced market-making expertise
• Potential liquidity enhancement for tokenized products
• Guidance on designing tokenized markets that fit institutional workflows

Combined with Backed’s issuance stack and Kraken’s custody and exchange infrastructure, this creates a platform aimed squarely at institutional use of tokenized RWAs-hedge funds, prop trading firms, and asset managers seeking scalable, regulated exposure and trading capabilities.

4. Real-World Asset Tokenization: Market Size and Positioning

The Kraken–Backed deal sits inside a broader shift to tokenizing traditional assets on public and permissioned blockchains.

4.1 RWA market growth and composition

The tokenized RWA market has grown from roughly $85 million in 2020 to about $30–35 billion by the end of 2025, with a sharp acceleration in 2025:

• The market expanded from about $8.6 billion to more than $23 billion in the first half of 2025 alone-roughly 260 percent growth.

By category, approximate end-2025 composition is:

• Private credit: ~$17–18.7 billion, around 60% of the market
• U.S. Treasuries: ~$7–8.8 billion, around 25%
• Real estate: ~6%
• Commodities: ~3%
• Equity tokens: ~1%
• Carbon credits: ~1%

Equity tokenization is still a small slice of the RWA landscape. But given equities’ global scale and liquidity, even modest penetration implies substantial absolute value.

4.2 Long-term projections

Long-range forecasts vary but all point to large potential:

• McKinsey: $2–4 trillion in tokenized assets by 2030
• Boston Consulting Group and ADDX: around $16 trillion by 2030
• Ripple and BCG: $18.9 trillion by 2033
• Standard Chartered: $30 trillion by 2034

Even the low end implies order-of-magnitude growth from current levels. The spread reflects uncertainty around regulation, institutional adoption, and technical standards.

Kraken’s thesis fits cleanly within this backdrop:

• Equities are likely to take a growing share of tokenized assets.
• Integrated issuance-to-trading platforms should capture outsized value.
• Tokenized equities will coexist and interoperate with tokenized fixed-income and credit products.

The Backed acquisition positions Kraken to ride that expansion if the projections begin to materialize.

5. Competitive and Comparative Landscape

Tokenized RWAs draw participants from global asset managers, DeFi protocols, fintechs, and exchanges. Without listing every player, it is possible to place Kraken’s approach in context.

5.1 Key RWA categories and players (high-level)

Major tokenization efforts cluster into several categories:

• Tokenized Treasuries and money market funds
  Asset managers and fintechs tokenizing fund shares or notes, used as on-chain cash equivalents.

• Private credit and real-world lending
  Platforms originating or securitizing private loans and bringing them on-chain, often integrated with DeFi.

• Real estate and commodities
  Projects offering fractionalized stakes in property or commodity exposures.

• Tokenized equities and ETFs
  A smaller but fast-growing segment, where Backed/xStocks operate.

Kraken’s main differentiators:

• A regulated, vertically integrated exchange and custody stack
• A quickly scaling tokenized equity product with demonstrated traction
• Backing from both crypto-native firms and traditional market-structure specialists

5.2 Comparative positioning: Kraken/xStocks vs. other RWA segments

The table below situates Kraken’s tokenized equity initiative alongside other major RWA segments:

Kraken is betting on owning the tokenized equity vertical while acting as a trading and infrastructure layer for other RWAs. Many others have focused first on tokenized cash and yield products; Kraken is pushing directly on bringing equity markets on-chain.

6. Technical and Market Infrastructure: Multi-Chain and Always-On

Infrastructure choices will determine how far xStocks can scale and how easily they integrate with broader markets.

6.1 Multi-chain deployment

xStocks launched on Solana and later expanded to Ethereum, with planned support for TON, Tron, Mantle, and BNB Chain. This has several implications:

• User reach
  Different regions and user segments favor different chains. Tron and BNB Chain, for example, see strong uptake in parts of Asia and emerging markets, while Ethereum and Solana dominate DeFi-heavy ecosystems.

• Liquidity vs. accessibility
  Multi-chain deployment can fragment liquidity, but broadens integration options. Kraken and Backed must reconcile activity across chains while preserving a single off-chain collateral pool per asset.

• Resilience and optionality
  Supporting multiple networks hedges against technical issues or regulatory pressure on any single chain and lets Kraken follow user and developer activity across ecosystems.

6.2 On-chain/off-chain reconciliation and risk

A fully collateralized model hinges on accurate, continuous reconciliation between:

• On-chain token balances across supported networks
• Off-chain holdings of underlying securities in segregated custody accounts

The presence of an independent security agent with viewing rights over custody accounts adds oversight to ensure:

• Tokens are never minted without matching collateral
• Redemptions, corporate actions, dividends, and splits are processed properly
• Cross-chain token supply stays consistent and fully backed

Operational risks include:

• Mis-reconciliation between chains and custody accounts
• Errors in minting or burning tokens
• Gaps between smart-contract logic and off-chain records

As xStocks scale, Kraken’s ownership of Backed makes it easier to integrate reconciliation, monitoring, and risk management across its entire infrastructure.

6.3 Always-on settlement and trading

Beyond trading hours, the tokenized model changes settlement itself:

• Settlement can be near-instant via blockchains.
• Fewer intermediaries can reduce counterparty and operational risk.
• Programmability allows features such as automated distributions or conditional transfers.

For institutions, incorporating always-on, tokenized equities would force adjustments in operations, risk management, collateral workflows, and global trading strategies. The payoff is the ability to move and reuse collateral and positions continuously across both traditional and decentralized venues.

7. Regulatory and Compliance Considerations

Regulation is both the main constraint and the main enabler for tokenized securities. Kraken and Backed’s structure reflects an attempt to work within existing regimes while leaving room to adapt.

7.1 Jurisdictional structuring

Key elements of the regulatory design:

• Jersey SPV
  Backed Assets (JE) Limited in Jersey acts as the xStocks issuer, regulated by the Jersey Financial Services Commission. Jersey is a common base for structured products and institutional-grade SPVs.

• EU-compliant prospectuses
  Prospectus documents are filed with the Liechtenstein Financial Market Authority, aligning xStocks with EU securities law and offering regimes. This provides standardized disclosures and regulatory supervision.

• Custodian and broker relationships
  Underlying securities sit in segregated accounts at regulated custodians and brokers, overseen by an independent security agent responsible for monitoring collateralization and compliance with issuance terms.

The goal is to make xStocks usable by international investors and institutions while keeping them inside a clear, well-understood regulatory perimeter.

7.2 U.S. regulatory exclusion

xStocks explicitly exclude U.S. persons. Drivers include:

• Likely classification of tokenized stocks as securities under U.S. law
• Complexity around broker-dealer, transfer agent, and ATS requirements
• Uncertainty over how regulators would treat DEX trading of tokenized securities

Geo-fencing lowers regulatory risk but caps potential reach. If the U.S. market remains closed or difficult to access, that constraint will loom larger as the product grows.

7.3 Institutional comfort and compliance

Institutions typically require:

• Regulated issuers and custodians
• Bankruptcy-remote structures
• Clear disclosure frameworks
• Oversight and auditability

Backed’s setup delivers these components, improving the odds of institutional interest.

Remaining hurdles include:

• Accounting treatment of tokenized securities
• Tax handling across jurisdictions
• Integration into portfolio management and risk systems
• Differences in local laws governing tokenized financial instruments

How major jurisdictions evolve their rules will heavily influence adoption paths.

8. Risks and Negative Scenarios

The Kraken–Backed strategy is coherent, but execution sits at the intersection of regulatory, market, technical, and organizational risk.

8.1 Regulatory and legal risks

1. Regulatory reclassification or crackdown
   Authorities may decide current tokenized equity structures fall short of compliance, triggering enforcement or forcing redesign. Risk rises if regulators treat DEX trading of tokenized securities as unregistered exchange activity.

2. U.S. regulatory developments
   Restrictive U.S. policies could block expansion into the world’s largest equity market. Even supportive rules might demand substantial changes to meet broker-dealer, transfer agent, and exchange requirements.

3. Cross-border compliance complexity
   Serving users in 160+ jurisdictions means tracking and adapting to a patchwork of securities laws, KYC/AML rules, and investor-protection regimes. Sudden changes may require rapid offboarding in some markets or feature limitations.

8.2 Market and adoption risks

1. Limited institutional adoption
   Despite strong structuring, institutions may move slowly because of internal risk aversion, legacy systems, or limited perceived benefit over existing channels.

2. Competition from larger incumbents
   Major exchanges, asset managers, or brokerages could launch competing tokenized equity platforms, leveraging established client bases and brands. Kraken’s early lead does not guarantee defensibility.

3. User perception and trust
   Tokenized securities ultimately depend on trust in issuers, custodians, and legal structures. A single high-profile incident-at Kraken or elsewhere-could tarnish the entire segment.

8.3 Technical and operational risks

1. On-chain/off-chain reconciliation failures
   Mistakes in minting, burning, or reconciling collateral could cause under- or over-collateralization, disrupt markets, or draw regulatory scrutiny.

2. Smart contract vulnerabilities
   Bugs, exploits, or flawed integrations with DeFi protocols could result in loss of funds, frozen assets, or reputational damage.

3. Multi-chain complexity
   Managing consistent supply, pricing, and collateral across multiple chains introduces operational strain and increases exposure to bridge failures and liquidity fragmentation.

8.4 Strategic and execution risks

1. Integration challenges
   Merging Backed’s systems and team into Kraken could produce friction across culture, processes, or technology, leading to delays or operational gaps.

2. Overextension risk
   Kraken is simultaneously expanding into derivatives, equities, tokenized assets, and public markets. Pursuing so many fronts at once raises execution and coordination risk.

3. Reputational spillover
   As Kraken becomes more closely associated with tokenized equities, issues in this product line could affect perceptions of its broader business.

9. Scenario Analysis: Bull, Base, and Bear Paths

Given the uncertainties, it is useful to outline how the Kraken–Backed initiative might evolve under different conditions. The scenarios are qualitative and avoid price targets.

9.1 Scenario table

9.2 Bull case: tokenized equities as a new default

In the bullish path:

• Europe, Asia, and eventually the U.S. implement clear, workable rules for tokenized securities.
• Exchanges, broker-dealers, and asset managers begin settling assets on-chain at scale.
• 24/7 trading, T+0 settlement, programmable ownership, and DeFi composability drive broad usage.
• Tokenized equities become deeply embedded as collateral in both traditional and decentralized systems.

With a vertically integrated architecture in place early, Kraken:

• Turns xStocks into a core venue for global equity exposure
• Offers tokenization-as-a-service to institutions
• Attracts deep institutional liquidity and market-making
• Helps grow tokenized equities from a fringe product to a major RWA segment

9.3 Base case: steady growth in a fragmented regulatory landscape

In the base scenario:

• Regulatory clarity improves but remains inconsistent across regions.
• Adoption grows moderately-strong among advanced crypto participants and a subset of institutions, slower among large legacy firms.
• Tokenized equities sit alongside tokenized credit and Treasuries as one of several important RWA categories.
• Fragmentation across chains, jurisdictions, and platforms continues.

For Kraken:

• xStocks become a durable, profitable product line.
• Kraken is recognized as a leading non-U.S. venue for tokenized securities.
• Multi-chain expansion continues, but liquidity remains patchy across networks.

9.4 Bear case: regulatory constraint and stalled adoption

In the bear case:

• U.S., EU, or major Asian regulators impose tight restrictions on tokenized securities.
• Broker-dealer, transfer agent, issuance, and DEX requirements sharply limit distribution and secondary trading.
• Institutions largely avoid the category due to regulatory or operational friction.
• Tokenized equities remain confined to offshore venues with thin liquidity.

For Kraken, this could mean:

• Restructuring, rebranding, or relocating the xStocks program jurisdictionally
• Slower or negative growth in tokenized equities
• Higher perceived compliance risk for the entire segment
• A strategic pivot back toward derivatives, spot trading, and custody as primary growth drivers

Tokenized equities are one of the most promising yet least mature RWA segments. Kraken’s acquisition of Backed gives it the tools to shape that category-if regulation, technology, and market demand break in its favor.