Kraken Puts Tokenized Stocks to Work as Collateral for Leverage

Kraken, a leading cryptocurrency exchange, has introduced tokenized stocks as collateral for futures and margin trading. This move allows eligible users to open leveraged positions without first selling their tokenized assets.

The initial rollout supports 10 tokenized instruments, including major US technology companies such as Apple, Nvidia, and Tesla. Tokenized ETFs like the SPDR S&P 500 ETF and Invesco QQQ Trust are also eligible for collateral use.

Kraken applies a 'haircut' to each asset, reducing its lending value. Broad-market ETFs receive a 10% haircut, while more volatile stocks like Strategy and Robinhood are discounted by 30%. Collateral limits vary by asset type, with up to $1 million for broad-market ETFs and up to $250,000 for most individual stocks.

The service is limited to eligible clients outside the United States, with different collateral rules depending on the jurisdiction. Kraken notes that both collateral limits and haircuts will be reviewed periodically and remain subject to change.