Cryptocurrency exchange Kraken has started accepting select tokenized stocks and exchange-traded funds (ETFs) as collateral for futures and margin trading, allowing eligible users to open leveraged positions without selling their shares.
The feature initially supports 10 tokenized stocks and ETFs, including Apple, Nvidia, Tesla, Strategy, the SPDR S&P 500 ETF, and the Invesco QQQ Trust. Authorized users can post these shares as collateral without selling them first.
Each eligible asset is assigned a collateral haircut that reduces its credit value based on risk. Broad market ETFs receive the lowest value discount of 10%, while more volatile stocks like Strategy and Robinhood are discounted by 30%.
Kraken has also imposed collateral limits on each asset, with broad-market ETFs circumscribed to a collateral value of $1 million, most single stocks at $250,000, and tokenized gold and Circle shares at $100,000. The exchange said both collateral limits and haircuts will be subject to periodic review and are subject to change.
This feature is only available to eligible customers outside the United States. The exchange said tokenized shares can be used as collateral in futures trading in the European Economic Area, while margin support is available in other eligible jurisdictions outside the EU.
Related: STS Digital launches structured crypto platform with Kraken as first partner
The launch comes about a week after Kraken partnered with Maple to launch an onchain warehouse financing facility for institutional crypto lending, enabling the exchange to expand its lending activities through blockchain-based structured credit.
Tokenized assets gain broader financial utility
Kraken’s move adds to a number of efforts to expand the role of tokenized real-world assets in financial markets. Recent launches have focused on the employ of blockchain-based securities as collateral, settlement assets, and elements of institutional lending infrastructure.
In February, Franklin Templeton and Binance launched a program that allows institutions to employ tokenized shares of money market funds as trading collateral while the underlying assets remain in a regulated over-the-counter depository. BlackRock’s BUIDL tokenized U.S. Treasury fund is also accepted as trading collateral on Binance, as well as on Crypto.com and Deribit.
Earlier this week, Tradeweb made what it claimed was the first real-time purchase and sale of tokenized U.S. Treasury bonds settled for tokenized cash on the Canton Network.
According to RWA.xyz, real-world tokenized assets rose to about $32.6 billion in distributed value, while tokenized equities rose to about $2 billion from about $381 million a year earlier.
Source: RWA.xyz
