Kraken accepts tokenized stocks as collateral for leveraged trading
Crypto exchange Kraken has started letting eligible users use select tokenized stocks and exchange-traded funds (ETFs) as collateral for futures and margin trading, allowing them to open leveraged positions without selling their holdings.
The rollout initially includes 10 tokenized stocks and ETFs, including Apple, Nvidia, Tesla, Strategy, the SPDR S&P 500 ETF and the Invesco QQQ Trust. Users can pledge these assets as collateral while keeping ownership of them.
Kraken applies a collateral ”haircut” to each asset, reducing its lending value based on risk. Broad-market ETFs carry a 10% haircut, while more volatile stocks such as Strategy and Robinhood have a 30% haircut.
The exchange also set collateral limits. Broad-market ETFs can be used for up to $1 million in collateral value, most individual stocks are capped at $250,000, while tokenized gold and Circle shares are limited to $100,000. Kraken said these limits and haircuts may be updated over time.
The feature is available only to eligible users outside the United States. Tokenized stocks can be used as futures collateral in the European Economic Area (EEA), while margin trading support is available in other eligible markets outside the EEA.
The launch follows Kraken’s recent partnership with Maple to introduce an onchain warehouse financing facility for institutional crypto lending, expanding its blockchain-based lending business.
Tokenized assets expand beyond investing
Kraken’s latest move reflects the growing use of tokenized real-world assets (RWAs) across financial markets. Beyond simple investing, tokenized securities are increasingly being used as trading collateral, settlement assets and tools for institutional lending.
In February, Franklin Templeton and Binance introduced a program that lets institutions use tokenized money market fund shares as trading collateral while the underlying assets remain with regulated custodians. BlackRock’s tokenized US Treasury fund, BUIDL, is also accepted as trading collateral on Binance, Crypto.com and Deribit.
Earlier this week, Tradeweb completed what it described as the first real-time trade of a tokenized US Treasury settled with tokenized cash on the Canton Network.
Data from RWA.xyz shows the tokenized real-world asset market has grown to about $32.6 billion. Tokenized stocks alone have reached roughly $2 billion, up from around $381 million a year ago.
Featured image from: cointelegraph.com