Crypto exchange Kraken met with the US Securities and Exchange Commission’s Crypto Task Force on Monday to discuss the tokenization of traditional assets and a tokenized trading system.
A memorandum filed on Monday noted that SEC staff met with four representatives of Payward, Inc., Kraken Securities LLC, and two from the law firm Wilmer Cutler Pickering Hales and Dorr LLP.
The agenda was to discuss the tokenized trading system, the regulatory framework and legal requirements for operating the system and the potential benefits of tokenization.
Kraken’s SEC meeting came at a time when traditional exchange industry associations and global regulators have urged the SEC to take a stricter regulatory approach toward tokenized stocks.
The associations have argued that there is a lack of investor protection safeguards that are present in the traditional markets.
Tokenized stocks are typically not bound by the restrictions of traditional markets and can be traded 24/7. Kraken and Robinhood are the two most prominent platforms to offer these services.
Kraken announced its tokenized stocks service on May 22, which enables non-US investors to buy US equities around the clock.
Robinhood started offering tokenized stocks of US equities to users in the European Union on June 30.
On Wednesday, Kraken announced that it had expanded its tokenized stock product offering to the Tron blockchain.
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Tokenized stocks still in early stage
Currently, tokenized stocks are in a nascent stage of growth.
The total value of all tokenized stocks in circulation currently stands at $360 million, down 11% in the past 30 days, according to RWA.xyz.
This represents a mere 1.35% of all Real World Assets (RWAs) that have been tokenized, as nearly $26.5 billion worth of RWAs are currently onchain.
According to Binance research, tokenized stocks represent a trillion-dollar opportunity. If 1% of the entire global equities market gets tokenized, that could propel the sector to surpass the $1.3 trillion mark in market capitalization.
A Kraken survey released last week revealed that 65% of the 1,000 US investors who invest in both equities and crypto expect crypto to outperform equities over the next decade.
In July, Mark Greenberg, global head of Kraken’s Consumer Business Unit, told Cointelegraph that tokenized stocks should offer new levels of accessibility, programmability and global reach instead of simply replicating the Wall Street system onchain.
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