Kraken Adds Margin to Tokenized Stocks, Expanding Leverage Options

Kraken now lets eligible users trade tokenized equities on margin. The exchange extended its xStocks product so clients in select jurisdictions can borrow against positions in companies like Apple, Tesla, and Nvidia under the same margin framework Kraken applies to crypto assets.

Kraken launched xStocks in 2022 through a partnership with Digital Asset AG, a Swiss firm that issues tokenized versions of U.S. equities. Each token represents one share held by a custodian and trades 24/7 on Kraken's spot market. Until now those tokens could only be bought and sold for cash.

Adding margin changes the risk profile. A user who buys $10,000 worth of tokenized Apple shares on 3x leverage controls $30,000 in exposure. If Apple drops 15%, the position is underwater before the margin call hits. Kraken's liquidation engine treats xStocks the same as crypto collateral – automatic close-out when the loan-to-value ratio breaches the threshold.

The feature targets traders who want equity exposure without leaving the crypto exchange ecosystem. Competing platforms like Robinhood and eToro offer fractional shares and margin but operate on traditional settlement cycles. Tokenized stocks settle on-chain in seconds, and margin calls execute at the same speed.

Regulatory questions remain. Tokenized equities fall under securities laws in most jurisdictions, and margin trading adds leverage to an already complex compliance picture. Kraken said the feature is available only in jurisdictions where both tokenized securities and margin trading are permitted. The exchange did not specify which countries qualify.

Exchanges are building bridges between crypto infrastructure and traditional markets. Kraken's move follows similar steps by Binance and Bybit, which offer tokenized stock products with varying degrees of margin support. The difference is Kraken's custody model – Digital Asset AG holds the underlying shares, not Kraken itself, which may affect how regulators classify the product.

For traders, the practical question is whether the margin terms make sense. Kraken's funding rates on crypto margin positions have run between 0.01% and 0.05% per hour in recent months, depending on the asset. If the same rates apply to xStocks, a leveraged position held overnight costs roughly 0.24% to 1.2% in funding. That eats into returns fast on a position not meant to be held for weeks.

Kraken said it plans to add more xStocks to the margin-eligible list over time. The current set includes the most liquid U.S. large caps. The exchange did not give a timeline for the expansion.