Kraken acquires Backed Finance to expand tokenized stocks and ETFs

Kraken has taken over Backed Finance, a Swiss platform that turns real-world assets into tradable crypto tokens, according to Bloomberg.

This acquisition gives Kraken more control over tokenized stocks and ETFs that already trade on its platform and signals its plan to dig deeper into around-the-clock equity trading powered by blockchain rails.

Backed issues crypto tokens that mirror stocks and ETFs.They’re backed one-to-one by the actual securities, so when someone buys a tokenized share, it’s tied to the real thing sitting in custody.

Kraken didn’t share how much it’s paying to buy the company, but Arjun Sethi, Kraken’s co-CEO, said the goal is not chasing hype. “While everyone is talking about tokenized equities, we are just doing it,” Arjun said. “We are focused on long-term investment, not hype.”

The platform already lists several of Backed’s assets, but a full acquisition gives it the ability to streamline those products into its core system.

Kraken adds Backed’s xStocks to fuel token trading

Backed is the second-biggest platform offering tokenized stocks right now, with about 23% of the market, tracking over 60 tokenized equities and ETFs under the name xStocks.

These are structured to be fully backed by the underlying securities, which gives traders crypto versions of stocks that behave like the real thing, but unlike traditional stocks, they can be bought and sold any time, including on weekends and holidays.

BlackRock, the world’s largest asset manager, has created a tokenized money-market fund worth over $2.3 billion. Other centralized exchanges have also rolled out their own tokenized stock and ETF offerings this year, betting on the appeal of non-stop access and collateral flexibility.

Kraken, fresh off a funding round that values it around $20 billion, is clearly preparing to scale, aiming for a public listing in 2026.

The buyout of Backed is its fifth acquisition this year and fits the same expansion mindset. Backed was founded in 2021, and Kraken wants to take its xStocks product wider by making it native to its own systems.

Crypto IPOs struggle as market loses $1 trillion

This acquisition comes while crypto IPOs are getting crushed. Since Bitcoin peaked in October, more than $1 trillion has vanished from the total crypto market, which has made listing conditions brutal, especially for firms that already pushed out their IPOs earlier in the year.

In the U.S., IPOs raising over $50 million, excluding things like SPACs and closed-end funds, have dropped 5.3% on average this quarter. Compare that to the S&P 500, which has climbed 0.9%.

Zoom in on the five crypto-related companies that went public this year, and it gets uglier: they’re down an average of 31% this quarter alone.

Gemini Space Station Inc., led by Tyler and Cameron Winklevoss, went public in September at $28 per share. By the end of the third quarter, it had dropped 14%.

eToro saw its shares fall over 20% from May to September. Even Bullish, the institutional exchange run by Tom Farley, dropped 38% since October.

And that wasn’t the worst of it. Even stocks that had strong openings took a hit. Circle Internet Group Inc., which went public in June, has now lost about half its share value. But it’s not all red. Both Circle and Figure Technology Solutions Inc., a blockchain credit platform, are still trading above their IPO prices… barely.

There’s been one upside to the crash: Bitcoin trading volumes are up. Over the past 14 days, the average volume reached its highest point since March, giving exchanges like Kraken a short-term boost.

Still, bankers looking to close IPO deals before the year wraps are running out of time.

Some have already stepped back. John Foraker, the CEO of Once Upon A Farm PBC, said on LinkedIn this past Sunday that the company won’t go public until 2026. He blamed delays on the government shutdown, saying it “got in the way.”

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