Kraken takes tokenized stocks to Europe's largest companies, without shareholder rights

Payward, the parent of the Kraken crypto exchange, said on Wednesday that its xStocks framework has issued tokens tracking more than 200 UK- and EU-listed companies, its first large step beyond US shares, according to a Payward press release. The tokens are not offered to investors in the US or the UK.

A token backed by a share, but not a share

Each new token is "backed 1:1 by the underlying shares," Payward said, and every token issued is matched by a purchase of the underlying share, held at a regulated custodian for as long as the token trades. The brokerage group GTN handles execution and custody of those shares under a partnership with Payward Services.

Kraken's own risk disclosure sets out what holders do not get. The tokens are issued by Backed Assets (JE) Limited, a Jersey company, and "holders of xStocks do not have ownership in any of the underlying stock or shares of the companies to which they are economically linked," the disclosure says. They have no voting rights and no legal claims on the underlying shares if a company is liquidated, and dividends are reinvested into more tokens rather than paid in cash.

The scale Payward reports

With the European batch, xStocks covers more than 1,500 tokenized assets across stocks, exchange-traded funds and IPOs, holds over $1.1 billion in assets under management and has passed $45 billion in total transaction volume, with more than 550,000 unique holders, the company said. The tokens trade on Kraken and on partner platforms, and on blockchains including Solana, Ethereum and TON.

"A portfolio should not have borders or trading hours," Mark Greenberg, Payward's chief commercial officer, said in the release. Payward said hundreds of Hong Kong-listed stocks would follow "in the coming weeks," and that the London Stock Exchange intends to list xStocks and trade them on its LSE 24 venue in 2027, subject to regulatory approval.

Why the same product could not trade on a US venue

The US route to onchain stock trading is built differently. The Securities and Exchange Commission's "Innovation Exemption," issued on September 17, lets approved tokenized securities venues trade tokenized US stocks only if they verify that a token "provides holders the same rights and privileges as does traditional NMS stock of an equivalent class."

The SEC's fact sheet also says the term does not include a crypto asset through which a third party issues "its own security that provides synthetic exposure to an underlying security." The US projects FinanceInTime has compared in recent weeks were designed around that requirement.

Reach without rights is the trade-off to weigh

Our reading is that the European batch shows how fast tokenization can scale when the token is a claim on an issuer rather than a share: Payward says GTN's structure let it deploy hundreds of assets in weeks. That speed is the opportunity, giving holders in more than 110 markets exposure to listings they could not easily reach.

The threat sits in the disclosure: no ownership, no vote and no claim on a liquidation leave holders dependent on the issuer and the custodian. We would weigh the planned London listing as the test, since a regulated exchange would have to decide what rights the token carries. Our view would change if the London venue or a European regulator required share-like rights for these tokens.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.