What once seemed like a Michael Saylor fever dream has become reality. Bitcoin’s undeniable rise and legitimization, fueled by mainstream giants like BlackRock greenlighting crypto investments to avoid missing out, and J.P. Morgan and others quietly exploring the stablecoin market, signal a seismic shift. This isn’t just a new trend, it’s a financial revolution that’s turning naysayers into fervent believers.
Crypto, often dubbed “The People Money” for its decentralized, peer-to-peer nature, is disrupting traditional finance systems from payment through to lending and now securities. As the Carpenters sang, “We’ve only just begun.” Much like their unassuming hit, which started as a bank commercial, crypto has evolved from a novel way to buy pizza into a mainstream force. Kraken’s recent announcement of tokenized securities is a testament to this transformation, pushing the boundaries of what’s possible in finance.
What Are Tokenised Securities?
Robinhood, a modern Prometheus, gifted fractional shares to the masses, enabling retail warriors to storm the stock market. The GameStop rebellion, where traders wielded fractional shares to outmanoeuvre Melvin Capital’s short, proved their might. Now, Kraken’s xStocks, forged with Backed Finance, has the potential to offer tokenised U.S. stocks and ETFs, Apple, Tesla, Nvidia to non-U.S. investors, unbound by exchange hours.
How Do xStocks Work?
No sorcery, just blockchain brilliance! Backed Finance holds underlying stocks or ETFs in a 1:1 reserve not dissimilar from how a stablecoin functions, ensuring each xStock token mirrors the asset’s value. Backed Finance, a regulated intermediary, holds the tangible shares, while token holders wield crypto tokens representing their right to the asset’s value.
This enables 24/7 trading, instant settlement, and DeFi versatility, such as using xStocks as collateral in lending protocols, all while navigating regulatory frameworks with precision. These Solana based tokens, traded on Kraken and in time DeFi platforms like Kamino, grant economic exposure recorded immutably on the blockchain.
Fractional Shares vs. Tokenised Shares: A Divine Comparison
To grasp xStocks’ promise, we’ve listed how it differs fractional shares:
Ownership Structure:
- Fractional Shares: Direct ownership of a portion of a company’s equity, traded via regulated brokers on exchanges like Robinhood
- Tokenised Shares (xStocks): Digital tokens on the Solana blockchain, representing the economic value 1:1 of shares held by Backed Finance.
Trading Environment:
- Fractional Shares: Traded through brokers during regular (2:30 PM–9:00 PM GMT) and extended hours (9:00 AM–1:00 AM GMT) for eligible securities on platforms like Robinhood (source).
- Tokenised Shares (xStocks): Traded 24/7 on Kraken and Solana-based DeFi platforms, with instant settlement and global reach as popularity grows.
Rights and Benefits:
- Fractional Shares: Offer proportional dividends and voting rights (if applicable), mirroring traditional shares.
- Tokenised Shares (xStocks): May provide dividends through additional tokens, but voting rights are not guaranteed and depend on Backed Finance’s token design. See backed.fi for details.
Accessibility and Innovation:
- Fractional Shares: Broaden access but remain tied to traditional systems.
- Tokenised Shares (xStocks): Leverage blockchain for lower barriers, DeFi integration (e.g., collateral use), and borderless U.S. market access as the service is opened up more widely.
Moneybrain: The Prophet of Tokenisation
Moneybrain, a visionary of Tokenisation through our BiPS token which tokenising liquid assets will seek to unite crypto and securities via an API, offering tokenised stocks in time. Making moneybrain the one-stop exchange promising seamless access to markets qnd crypto assets.
A New Financial Dawn
From pizza trades to global dominion, crypto’s saga is unfolding. Tokenised securities like xStocks by Kraken and backed, are crafting a decentralised, inclusive future. As Crypto’s prophecy shines, finance bows to the blockchain’s will.