Kraken Moves Deeper Into Tokenization With Planned Takeover of Backed Finance
U.S.-based crypto exchange Kraken has agreed to acquire Swiss tokenization specialist Backed Finance AG, stepping up its bet that traditional securities will increasingly migrate onto public blockchains.
The Cheyenne, Wyoming–headquartered exchange said the deal is designed to “accelerate the global adoption of xStocks” – tokenized representations of real-world securities that already trade on conventional markets but are also issued on-chain. These tokenized instruments mirror equities and exchange-traded funds (ETFs), while being available within the decentralized finance (DeFi) ecosystem.
Backed Finance operates as a bridge between traditional capital markets and blockchain networks, providing infrastructure that allows regulated securities to be represented as tokens. Those tokens can then be held, transferred, and integrated into DeFi applications, while still being tied to underlying real-world assets such as blue-chip stocks or popular ETFs.
Earlier this year, Kraken began working with Backed to roll out tokenized stocks and ETFs to its own users. The products run on leading smart contract networks like Ethereum and Solana, allowing investors to gain exposure to traditional assets through blockchain-native instruments instead of brokerage accounts or legacy trading platforms.
In essence, tokenization is the process of converting rights to a real-world asset into a digital token on a blockchain. Each token represents a claim on the underlying asset or a share of it. For securities such as stocks or ETFs, that means investors can trade and custody blockchain-based tokens whose value tracks the original asset, while potentially benefiting from faster settlement, 24/7 trading, and composability with other crypto protocols.
Kraken argues that absorbing Backed will bolster its long-term vision of building “open and programmable capital markets.” By embedding a tokenization platform into its stack, the exchange aims to go beyond spot crypto trading and staking and become a full-scale infrastructure provider where both regulated securities and native digital assets coexist on-chain.
Although full terms of the deal were not disclosed, the acquisition underscores a broader industry trend: large, regulated crypto exchanges are racing to lock in strategic positions in tokenized real-world assets (RWA). As institutions explore blockchain-based settlement and on-chain collateral, platforms that can safely issue, manage, and trade tokenized securities are gaining prominence.
Backed Finance stands out in this segment because it focuses on issuing tokens that are explicitly backed by real securities held in custody, rather than synthetic derivatives or loosely correlated instruments. Each of its on-chain tokens is linked to an off-chain asset, enabling more transparent risk assessment and potentially smoother regulatory treatment compared with some earlier experiments in tokenized stocks.
For Kraken, bringing that capability in-house could reduce reliance on third-party issuers and give the exchange greater control over how tokenized assets are structured, listed, and integrated into its products. It may also make it easier to expand into new jurisdictions, where different regulatory regimes have distinct requirements for handling tokenized securities and investor protection.
The focus on xStocks hints at a future in which traders navigate seamlessly between crypto-native assets and tokenized versions of traditional instruments. A user might, for example, hold Bitcoin, Ether, stablecoins, and a basket of tokenized U.S. equities in the same on-chain wallet, using a single interface and compatible DeFi tools to manage all of them.
Beyond simple spot trading, tokenized securities open the door to programmable financial products. Smart contracts can be used to build automated portfolios, structured products, or collateralized lending markets that include both cryptocurrencies and xStocks. In that scenario, a tokenized share of a major tech company could serve as collateral for borrowing stablecoins, or be included in a yield-generating DeFi strategy, all within a unified system of on-chain rules.
The acquisition also reflects a broader shift in how the crypto industry views regulation. Rather than trying to exist entirely outside traditional finance, leading exchanges are increasingly positioning themselves as compliant gateways to tokenized versions of regulated assets. By working with a firm that already specializes in bridging equities and ETFs into DeFi, Kraken is signaling it wants to sit at the intersection of these two worlds, not in opposition to them.
Tokenization advocates argue that bringing stocks, bonds, funds, and other financial instruments onto blockchains could dramatically reduce settlement times, cut intermediaries, and enhance transparency. Every transfer, pledge, or use of an asset can be recorded on-chain, creating a clear, auditable history. For institutions, that can simplify compliance and risk management; for retail users, it can mean simpler access and less friction.
Still, the path to widespread adoption of tokenized securities is far from guaranteed. Regulatory frameworks for RWAs on public chains are still evolving, and requirements differ sharply between the United States, Europe, and Asia. Questions around investor protections, custody of underlying assets, and cross-border compliance all shape how quickly tokenized equities and funds can scale.
Kraken’s move suggests it believes those regulatory puzzles will eventually be solved and that it is better to build the infrastructure now than to wait. By integrating Backed’s technology and expertise, Kraken can experiment with product design, test market demand, and prepare for tighter regulatory clarity while competitors may still be in early-stage pilots.
In parallel, the acquisition highlights growing competition between major exchanges and financial institutions in the RWA space. Banks, asset managers, and blockchain-native firms are already running pilots for tokenized money market funds, government bonds, and private credit. Kraken’s emphasis on xStocks and ETFs adds another product category to this expanding universe and helps differentiate its offering from pure-play crypto rivals.
From a user perspective, tokenized securities could change how portfolios are built and managed. Rather than opening multiple accounts across brokers, banks, and exchanges, investors might increasingly favor a single, regulated platform that lets them access everything from Bitcoin to tokenized index funds. Kraken’s strategy appears aimed at becoming that kind of one-stop hub.
Another potential impact lies in market access. Tokenization can, in theory, support fractional ownership with far smaller minimums than traditional brokerage accounts, while enabling 24/7 markets instead of being limited to stock exchange hours. If regulatory rules permit, that could broaden access to certain securities for users in regions where conventional brokerage infrastructure is limited or expensive.
At the same time, the integration of traditional securities into the crypto ecosystem could introduce new types of risks. Market participants will need to understand not only the volatility and smart contract risks of DeFi, but also the regulatory, issuer, and counterparty risks associated with the underlying assets. Kraken’s ability to manage those risks transparently will be a crucial test of its tokenization ambitions.
As the deal progresses, market watchers will be looking at how quickly Kraken rolls out new xStock products, which jurisdictions they target first, and how deeply these tokenized instruments are integrated into DeFi protocols supported by the exchange. The acquisition of Backed Finance positions Kraken to play a leading role in shaping how tokenized equities and funds are issued, traded, and used across the evolving digital asset landscape.