Kraken met with the SEC's Crypto Task Force on August 25 to promote a tokenized trading system for traditional stocks and seek legal clarity.
The cryptocurrency exchange Kraken has engaged in important dialogue with the leading U.S. regulator to promote the development of the tokenized asset market, amid heated debates about the future of digitizing traditional financial instruments.
On August 25, a representative from Kraken had a meeting with the U.S. Securities and Exchange Commission's (SEC) Crypto Assets Task Force to discuss the proposed tokenized trading system and the broader legal framework for digitizing traditional assets. The meeting included representatives from the law firm Wilmer Cutler Pickering Hale and Dorr LLP.
According to SEC filings, the parties discussed in detail the proposed system architecture, the transaction lifecycle, and the legal framework necessary for implementation. Kraken emphasized the potential of blockchain in facilitating fundraising and democratizing access to the financial market.
Kraken is currently one of the few platforms that has successfully implemented a tokenized version of major stocks such as Apple, Tesla, and Nvidia, along with exchange-traded funds (ETFs). These tokenized assets, primarily aimed at investors outside the U.S., allow access to popular stocks at significantly lower costs compared to traditional trading.
The debate on the future of the market
While Kraken and similar platforms expect regulators to provide clear guidance soon, opposition is strongly advocating against this trend. The World Federation of Exchanges (WFE) recently called for existing securities regulations to apply to tokenized stocks just like traditional stocks, emphasizing concerns about market integrity and investor protection.
The SEC's stance so far shows a trend towards applying existing federal laws when overseeing tokenized assets. SEC Commissioner Hester Peirce stated in July that blockchain, while a powerful technology, does not have the 'magical ability to transform the nature of the underlying asset.' This perspective reflects the SEC's trend of prioritizing regulatory compliance over encouraging innovation.
The move to directly approach the SEC's Crypto Task Force shows that Kraken is working to counter arguments from the WFE and some public companies opposing the tokenization of stocks. This dialogue takes place in the context of the rapidly growing tokenized asset market, which needs a clear legal framework to ensure sustainable development.