Bloomberg revealed that crypto exchange Kraken is considering adding stock trading to its platform.
The news is not official, so much so that it should still only be considered a rumor for now, but Bloomberg cites as a source a person familiar with the matter.
Crypto exchange Kraken targets the stock market
Kraken is, along with Coinbase, one of the historic crypto exchanges in the United States.
Established as early as 2011, it is based in San Francisco, and now in the absence of FTX it is the second largest US crypto exchange, behind just Coinbase.
Although it does not appear to be among the world’s top exchanges in terms of spot market trading volume, in the past 24 hours it has neared $500 million.
Coinbase scored more than 800, but for example the other famous US crypto exchange, Gemini, stopped at 70.
In fact, the biggest competition comes not from the other US crypto exchanges, but from foreign ones, and from platforms that allow stock trading, such as Robinhood.
It is no coincidence that the initiative to add stock trading to the platform was received by the media as an attack on Robinhood itself, which has also offered crypto trading for some time now.
The speculation reported by Bloomberg is that Kraken may add stock and ETF trading as early as next year, starting with US and UK users.
Crypto and stocks
Although there are many platforms dedicated to stock trading that have also added cryptocurrencies over time, successful attempts to add stocks to crypto platforms have not yet been made.
Binance had tried with stock tokens, but had to give up in 2021 due to legal issues.
The US version of FTX also offered stock trading, but had to close due to bankruptcy.
So to date there is no crypto platform that also allows stock trading, and Kraken may succeed where Binance and FTX failed.
Kraken’s project
The idea of the crypto exchange seems to be to create a new division, called Kraken Securities, which would even have already acquired the necessary licenses in the UK, in order to obtain a license to offer stock trading in the US as well.
A Kraken spokesperson said that the company is constantly exploring ideas to expand and improve its offerings, without denying the rumor.
Therefore, the initiative seems plausible, while on the details there is no confirmation yet.
Among the steps already taken to expand and improve the offering is to redouble its efforts outside the United States, partly because of the internal problems it has had with the SEC.
It is therefore a project in the expansion phase, which not only plans to increase the number of crypto customers by going outside the US, but also to offer its customers new services and products.
On the other hand, precisely the success of initiatives such as Robinhood’s shows that those who operate in crypto markets often do not despise investing or speculating in the stock market as well.
For example, the figure of Elon Musk revolves around both publicly traded companies such as Tesla and cryptocurrencies such as Dogecoin and Bitcoin.
Kraken: the stock market and the crypto market
However, these are two different markets, albeit often exploited in similar ways, especially by speculators.
For investors, on the other hand, there is a huge difference between choosing a stock of a company, perhaps analyzing its economic performance, and opting instead for some cryptocurrency that in itself produces no profit.
It should be noted, however, that it is possible for short-term speculation to often prevail over long-term holding, and for example, technical analysis tools of price performance are virtually identical whether used on equities or cryptocurrencies.
Since those who consistently trade on crypto exchanges are primarily speculators, it seems to make perfect sense to make it available to them to trade equities as well.
However, speculators generally use complex financial products, and especially derivatives such as futures to do margin trading in leverage, and in this respect Kraken is not among speculators’ favorite platforms.
For example, the trading volume of crypto derivatives on Binance in the last 24 hours was more than a thousand times that on Kraken (28 billion versus 20 million).
In light of this, it is possible to imagine that, should it truly decide to add equity trading, Kraken would also have to enhance its offering of leverage and derivatives-based instruments and services.
Source: https://en.cryptonomist.ch/2023/09/28/kraken-crypto-exchange-could-open-stock-market/