Kraken Acquires Backed Finance to Bolster Tokenized Asset Ambitions: A Strategic Power Move

In a decisive step to cement its leadership in the burgeoning realm of tokenized real-world assets (RWAs), Kraken, the third-largest centralized cryptocurrency exchange by volume in the United States, announced on Tuesday its acquisition of Backed Finance. This strategic move is designed to significantly expand and enhance Kraken’s tokenized stock and ETF offerings, directly integrating a major issuer into its ecosystem. The acquisition signals a deepening commitment from a top-tier exchange to bridge traditional finance with blockchain technology, aiming to capture a larger share of a market projected for exponential growth.

The undisclosed deal brings Backed Finance, a specialist in issuing blockchain-based representations of traditional securities, under the Kraken umbrella. Backed boasts an approximate 23% market share in its segment and offers exposure to more than 60 tokenized equities and exchange-traded funds (ETFs). This integration is poised to directly bolster Kraken’s existing tokenized equity platform, xStocks, which the company reported surpassed $10 billion in total trading volume as of November. As stated in Kraken’s official blog post, “Bringing Backed fully into our ecosystem also allows greater alignment on strategy and investment priorities, unlocking the full economic potential of xStocks.”

The Strategic Rationale Behind the Acquisition

This acquisition is not merely an expansion of inventory; it is a vertical integration strategy. Prior to this move, Kraken’s xStocks platform acted as a marketplace, listing tokenized assets issued by third parties like Backed. By acquiring the issuer itself, Kraken gains direct control over a critical part of the value chain: origination. This allows for greater alignment on product development, regulatory compliance strategy, and technological roadmaps.

Historically, cryptocurrency exchanges have competed primarily on trading fees, asset diversity, and security. However, as the market matures, differentiation through unique financial products and deeper integration with traditional finance has become a key battleground. Kraken’s move mirrors a broader industry trend where control over the underlying asset infrastructure is seen as a competitive moat. It provides Kraken with the ability to potentially launch new tokenized products faster, ensure their quality and compliance, and create a more seamless experience from issuance to trading and custody—all within its own ecosystem.

Who is Backed Finance? Understanding the Acquisition Target

Backed Finance is a Switzerland-based issuer specializing in creating blockchain-based tokens that represent ownership in traditional financial assets. Each Backed token (bTokens) is fully collateralized by the corresponding real-world security held in custody with a regulated Swiss bank. This model provides investors with exposure to assets like Apple stock or a S&P 500 ETF through a blockchain wallet, enabling 24/7 trading and settlement outside traditional market hours.

With a portfolio of over 60 tokens and a claimed 23% market share among similar issuers in Europe, Backed has established itself as a significant player in the institutional-grade tokenization space. Its assets are primarily issued on the Ethereum blockchain as ERC-20 tokens, with some on Base. For Kraken, acquiring this established platform provides immediate scale and credibility. Instead of building an issuance arm from scratch—a process fraught with regulatory complexity and time delays—Kraken instantly inherits a functioning, compliant operation with an existing product suite and institutional relationships.

Supercharging Kraken’s xStocks Platform

The primary beneficiary of this acquisition is Kraken’s dedicated tokenized assets platform, xStocks. Launched to provide European clients with access to tokenized versions of major U.S. equities and ETFs, xStocks has seen substantial traction, evidenced by its reported $10 billion+ trading volume milestone.

The integration of Backed Finance is expected to enhance this platform in several concrete ways:

• Expanded Product Range: While xStocks already listed Backed products among others, direct control could lead to a rapid expansion of the available token lineup, potentially prioritizing assets in high demand from Kraken’s user base.
• Improved Technical Synergy: Deeper integration can streamline the minting and redemption processes for bTokens on Kraken’s platform, potentially improving liquidity and reducing friction for users.
• Strategic Product Development: With aligned priorities, Kraken and Backed can co-develop new product types, such as tokenized bonds or structured products, specifically tailored for the crypto-native investor.

This move strengthens xStocks’ position against other crypto-native platforms offering similar services and against traditional financial institutions beginning their own tokenization pilots.

The Competitive Landscape: Kraken vs. Coinbase & Binance

Kraken operates in a highly competitive U.S. market alongside giants like Coinbase and Binance.US. Each exchange has taken distinct approaches to the tokenized asset opportunity.

• Coinbase has focused heavily on regulatory engagement and building its base as a publicly-traded company. Its ventures into tokenization have often been linked to its layer-2 blockchain, Base, and ecosystem development, emphasizing decentralized finance (DeFi) integrations.
• Binance, globally, has offered various tokenized stock products through partnerships but has faced significant regulatory challenges that have impacted these services in multiple jurisdictions.
• Kraken, with the Backed acquisition, is pursuing a strategy of direct control and vertical integration within the European market initially. This distinguishes its approach as one focused on owning the core issuance infrastructure rather than solely acting as a distribution partner.

It is crucial to note that these tokenized equity products are distinct from spot Bitcoin or Ethereum ETFs approved in the U.S. They are blockchain-tracked derivatives of stocks, not direct securities registered with the SEC, and are primarily offered to non-U.S. customers due to regulatory considerations.

The Broader Context: The Rise of Real-World Asset (RWA) Tokenization

Kraken’s acquisition is a high-profile validation of the RWA tokenization thesis. Tokenization refers to the process of creating digital tokens on a blockchain that represent ownership of a real-world asset. Proponents argue it can unlock immense value by increasing liquidity, enabling fractional ownership, reducing settlement times, and automating compliance.

The financial industry has seen growing activity in this space from both crypto-native firms like Ondo Finance and Maple Finance (focusing on treasury bills and loans) and traditional giants like JPMorgan with its Tokenized Collateral Network. By acquiring a leading issuer of tokenized equities, Kraken is positioning itself at the intersection of these two worlds, betting that demand for seamless access to traditional markets via crypto infrastructure will continue to surge.

Conclusion: A Strategic Inflection Point

Kraken’s acquisition of Backed Finance is more than a simple corporate purchase; it is a strategic inflection point that underscores the exchange’s ambition to be a foundational pillar in the future of digitized finance. By bringing a major tokenized asset issuer in-house, Kraken gains strategic autonomy, accelerates its product roadmap, and deepens its moat in a competitive sector.

For the broader market, this move signifies maturation. It represents a shift from speculative trading venues towards integrated financial platforms capable of handling complex, compliance-focused asset classes. While the immediate impact will be felt on Kraken’s xStocks platform for European users, the long-term implications could shape how global exchanges architect their services.

Readers and market watchers should observe several developments following this acquisition: the pace of new product launches on xStocks post-integration; any announcements regarding expansion into new asset classes like bonds or commodities; and regulatory communications from Kraken regarding these services in different jurisdictions. Furthermore, it will be critical to monitor how competitors respond—whether through partnerships, internal builds, or similar acquisitions—in what is rapidly becoming one of the most strategically vital fronts in the convergence of crypto and traditional finance