Kraken acquires Backed Finance and expands tokenized stocks and ETFs

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

The acquisition gives Kraken more control over the tokenized stocks and ETFs already traded on its platform, and signals plans to delve deeper into 24-hour stock trading powered by blockchain rails.

Backed crypto tokens issue crypto tokens that mirror stocks and ETFs. They are backed 1:1 by real securities, so when someone buys a tokenized stock, it is tied to the real thing being stored.

Kraken did not disclose the purchase price, but Kraken co-CEO Arjun Sethi said the objective was not to chase hype. “Everyone is talking about tokenizing stocks, but we are just doing it,” Arjun said. “We are focused on long-term investment, not hype.”

The platform already lists some of Backed’s assets, but the full acquisition will allow it to streamline those products into its core systems.

Kraken adds Backed xStocks to facilitate token trading

Backed is currently the second largest platform offering tokenized stocks, accounting for approximately 23% of the market and tracking over 60 tokenized stocks and ETFs under the xStocks name.

These are constructed to be fully backed by the underlying securities, giving traders a cryptographic version of a stock that behaves just like the real thing, but unlike traditional stocks, it can be bought and sold at any time, including weekends and holidays.

BlackRock, the world’s largest asset manager, has launched a tokenized money market fund worth over $2.3 billion. Other centralized exchanges have also started offering their own tokenized stocks and ETFs this year, betting on the appeal of non-stop access and collateral flexibility.

Kraken, which just closed a roughly $20 billion funding round, is clearly gearing up to scale up with the aim of going public in 2026.

The acquisition of Backed is the company’s fifth acquisition this year and fits into the same expansion mindset. Backed was founded in 2021, and Kraken hopes to further expand its xStocks product by making it native to its systems.

Crypto IPOs struggle as market loses $1 trillion

The acquisition comes as cryptocurrency IPOs are collapsing. More than $1 trillion has been wiped out of the overall cryptocurrency market since Bitcoin peaked in October, making listing conditions especially tough for companies that had already held initial public offerings earlier this year.

In the U.S., IPOs raising $50 million or more, excluding SPACs and closed-end funds, fell an average of 5.3% this quarter. Compare this to the S&P 500, which rose 0.9%.

The situation is even worse when we look at the five crypto companies that went public this year, with stocks declining an average of 31% in the past quarter alone.

Gemini Space Station, led by husband and wife team Tyler and Cameron Winklevoss, went public in September at $28 per share. It fell 14% by the end of the third quarter.

eToro’s stock price fell more than 20% from May to September. Even Tom Farley’s institutional exchange Burish has fallen 38% since October.

And that wasn’t the worst thing. Stocks that had been doing well were also hit hard. Circle Internet Group Inc., which went public in June, has now lost about half its stock value. But not everything is red. Both Circle and blockchain credit platform Figure Technology Solutions Inc. are still trading just barely above their IPO prices.

There was one good side to this crash. The reason is that the trading volume of Bitcoin has increased. Average volume over the past 14 days has reached its highest since March, providing a near-term tailwind for exchanges like Kraken.

Still, time is running out for bankers hoping to close an IPO deal before the end of the year.

Some have already withdrawn. John Foraker, CEO of Once Upon a Firm PBC, said on LinkedIn last Sunday that he expects the company to go public in 2026. He blamed delays in the government shutdown for “getting in the way.”