Rumor: Kraken explores stock trading integration

According to Bloomberg, cryptocurrency exchange Kraken is thinking about integrating stock trading into its system. Since the information is still unofficial, it should only be treated as a rumor for the time being. However, Bloomberg cites an individual with knowledge of the situation as a source.

Kraken, a cryptocurrency exchange, tracks the stock market

Coinbase and Kraken are two of the oldest cryptocurrency exchanges in the US.

It was founded in 2011 and is headquartered in San Francisco. With the removal of FTX, it is currently the second-biggest cryptocurrency exchange in the US, only behind Coinbase.

In terms of spot market trading volume, it does not seem to rank among the top exchanges in the world, but over the last day, it has come close to $500 million.

While Coinbase received a score of over 800, Gemini, another well-known US cryptocurrency exchange, only managed a score of 70.

The largest competitors, in actuality, are international cryptocurrency exchanges and stock trading services like Robinhood rather than other US cryptocurrency exchanges.

It’s no accident that the media viewed the plan to allow stock trading on the site as a jab at Robinhood, which has long provided cryptocurrency trading as well.

According to rumors circulated by Bloomberg, Kraken might start offering stock and ETF trading to US and UK users as early as next year.

Stocks and cryptocurrency

There have been several stock trading systems that have also included cryptocurrencies over time, but there haven’t yet been any successful attempts to incorporate equities into cryptocurrency platforms.

In 2021, Binance was forced to abandon its attempt to use stock tokens due to regulatory concerns.

Stock trading was also available on the US branch of FTX, however it was forced to close owing to insolvency.

There isn’t already a cryptocurrency platform that facilitates stock trading; nonetheless, Kraken has a chance to thrive where Binance and FTX failed.

Kraken’s endeavor

According to the cryptocurrency exchange’s plan, a new subsidiary named Kraken Securities will be established. This division would even have the required licenses in the UK in order to get permission to conduct stock trading in the US.

Without refuting the report, a Kraken representative stated that the company is always looking for new ways to enhance and broaden its offerings.

Consequently, the endeavor appears credible even though there is currently no confirmation of the specifics.

Redoubling its efforts outside of the US is one of the actions previously taken to enhance and grow the service, in part due to internal issues it has been having with the SEC.

Thus, it’s an expansion-phase initiative that aims to provide its clientele with additional services and goods in addition to expanding its crypto customer base outside of the US.

However, the success of projects like Robinhood’s demonstrates that people who work in the cryptocurrency markets frequently have no problem investing or speculating in the stock market as well.

For instance, Elon Musk’s reputation is centered around cryptocurrencies like Dogecoin and Bitcoin as well as publicly traded firms like Tesla.

Kraken: cryptocurrency and stock markets

Though they are sometimes used in similar ways, particularly by speculators, these are two distinct marketplaces nonetheless.

For investors, however, there is a significant distinction between selecting a cryptocurrency that generates no return at all and picking a company’s stock after possibly examining its financial record.

It is important to keep in mind, nevertheless, that short-term speculation may sometimes triumph over long-term holding. For instance, technical analysis techniques for evaluating price performance on equities and cryptocurrencies are nearly the same.

Making the option to trade stocks available to regular traders on cryptocurrency exchanges seems to make perfect sense, given that the majority of these traders are speculators.

Kraken is not one of the preferred platforms for speculators because they typically employ sophisticated financial products, particularly derivatives like futures, to engage in leveraged margin trading.

For instance, about a thousand times as much cryptocurrency derivatives were traded on Binance in the past day than they were on Kraken (28 billion against 20 million).

Given this, it is conceivable that Kraken would need to improve the instruments and services it offers based on leverage and derivatives if it were to actually decide to include stock trading.