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Why Are Capital Markets Moving Onchain
Learn how capital markets are moving onchain, why assets are being tokenized, and where tokenized equities fit.
Key Takeaways
- Capital markets are the systems that enable financial assets to be issued and traded.
- Blockchain technology provides new infrastructure for representing and transferring financial assets.
- Tokenization allows traditional assets, including publicly traded equities, to exist onchain.
- Tokenized equities are part of a broader trend toward bringing financial assets onto blockchain networks.
Capital markets have changed significantly over the past few decades. Trading floors gave way to electronic exchanges, paper certificates became digital records, and investing became accessible through online brokerages.
Today, blockchain technology is introducing another way for financial assets to be issued, transferred, and accessed.
As more financial assets move onchain, they're becoming part of a growing ecosystem of wallets, exchanges, and applications built on blockchain networks.
What are capital markets?
Capital markets connect investors with businesses and governments looking to raise capital.
They include public equity markets, bond markets, and other financial markets where assets are issued and traded. Behind every transaction is a network of exchanges, brokers, custodians, clearing houses, and other financial institutions that help markets operate.
For most investors, this infrastructure works behind the scenes. It's what makes buying, selling, and holding financial assets possible.
What does "onchain" mean?
When an asset exists onchain, ownership and transfers are recorded on a blockchain network.
Instead of existing only within traditional financial systems, onchain assets can be accessed through compatible wallets and applications. Depending on the asset and platform, they can also interact with other blockchain-based services.
Not every financial asset can move onchain today, but tokenization is making that possible for a growing range of asset classes.
Why are financial assets being tokenized?
Tokenization makes it possible to represent traditional financial assets on blockchain networks.
For asset issuers, it opens new ways to distribute financial products. For developers, it creates opportunities to build applications that interact with real-world assets. For users, it can provide new ways to access and manage financial assets through blockchain-based platforms.
As blockchain infrastructure continues to develop, tokenization is being explored across equities, bonds, money market funds, and other asset classes.
Where do tokenized equities fit?
Tokenized equities are one example of this broader shift.
They represent publicly traded stocks and ETFs on blockchain networks, connecting traditional equity markets with onchain infrastructure.
Rather than replacing existing financial markets, tokenized equities extend them into an environment where they can be accessed through compatible exchanges, wallets, and applications.
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Important Information
xStocks are not available in the U.S. or to U.S. persons. Geo restrictions apply. Read Kraken's xStocks Risk Disclosure and the Base Prospectus and related Final Terms for more information. This content is partner enablement material, not investment advice. IPO-related content carries additional communication rules - see the brand kit before repurposing. In the EEA and most countries outside the US, IPO access on Kraken is via xStocks - tokenized securities issued by Backed Assets (JE) Limited pursuant to an EU-registered prospectus, providing price exposure only. xStocks are not equity and confer no voting or shareholder rights. Allocation is subject to underwriter decisions and is not guaranteed; any funds not allocated are returned. The value of investments may go down as well as up. Not available in the U.S. or to U.S. persons, or in the United Kingdom, Canada or Australia. Geo restrictions apply. xStocks are made available in the EEA by Payward Europe Digital Solutions (CY) Limited, regulated by CySEC (licence no. 342/17); and elsewhere by Payward Digital Solutions Ltd., regulated by the Bermuda Monetary Authority.