On September 27, Bloomberg published an article, stating that the Kraken crypto exchange plans to launch trading in stocks and ETFs for service expansion next year. The company already obtained all needed licences. Initially, new functions will be available for residents of the US and UK.
Kraken Securities legality and usage
According to Bloomberg, the new service will be called Kraken Securities. The exchange has already received all necessary approvals from UK regulators and applied for registration with the US Financial Industry Regulatory Authority (FINRA).
What kind of stocks and ETFs will be available is not stated, but trading in traditional financial instruments is scheduled to begin next year. Users will have a single balance that will reflect all assets. This unified balance will allow them to transition between selling cryptocurrencies and buying shares or other securities, and vice versa, without the need to withdraw their funds from the exchange.
ETF, or Exchange Traded Fund, is a financial instrument that combines assets. They are tradable and remind of stocks. However, ETFs got few key differences – stocks only represent ownership in a particular company, whereas ETFs provide a number of assets. Thus, ETFs are an ideal option for those investors who are seeking to include in their portfolio various assets without actually investing in just one of them.
Why does Kraken need to get into stocks market
Kraken was launched back in 2011. Nonetheless, currently, it accounts only for about 3.7% of all spot crypto trading volume, according to The Block. Presumably, with the launch of the new service, the exchange wants to expand its business in the face of reduced interest within the crypto market.
Additionally, in February of this year, the exchange experienced regulatory pressure. The US Securities Commission (SEC) accused Kraken’s staking service of not complying with regulatory standards. As a result, Kraken terminated its operation for US clients and paid a $30 million fine.
Other crypto exchanges launching trading in stocks and ETFs
Kraken is not the first platform that tried to combine traditional finance tools with crypto assets. For instance, Robinhood, launched in 2015, had been providing a convenient service for trading exclusively in stocks and ETFs over the course of several years. However, in 2018, the company started adding access to cryptocurrencies. There are now 15 cryptocurrencies available for trading on it, including BTC, ETH, DOGE, and SHIB.
The US division of the infamous FTX exchange also launched trading in stocks and ETFs in closed beta mode in May, 2022. The public launch had never happened as the exchange went bankrupt in November of that year.
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