Kraken co-CEO Arjun Sethi said tokenized equities are unlikely to see rapid adoption among major U.S. financial institutions, suggesting the shift will play out over years rather than months.
Speaking with The Block's Gareth Jenkinson at Consensus 2026, Sethi said Kraken's xStocks product has settled around $5 billion worth of value onchain since launching in June 2025. He described tokenized real-world assets as the next stage of crypto markets after bitcoin, altcoins, and stablecoins.
"Tokenized equities, for us, is just a natural evolution from BTC to ETH to alts to memecoins to the stablecoin revolution to now a real-world asset," Sethi said.
However, he argued that clearer U.S. rules around tokenized equities are unlikely to quickly change how institutions operate. "I don't think it's going to open the floodgates the way people think," he said. "It's not like these broker-dealers and these banks and institutions are going to change their collateral systems."
Sethi noted that most of the current demand is coming from fintech firms outside the U.S., particularly in markets such as Mexico and Brazil, as well as parts of Africa and Southeast Asia.
"So I think that journey takes five to 10 years," he said. "It doesn't take five months."
Beyond xStocks
Sethi said Kraken built xStocks to work across wallets, decentralized exchanges, and trading platforms rather than keeping the product inside its own ecosystem. "It shouldn't be walled gardens," he added, pointing to integrations with wallets such as MetaMask and Phantom, along with DEXs and rival exchanges like Bybit.
"The problem with trying to win the race is you might be racing in the wrong lane," Sethi said when asked about competition from exchanges rolling out tokenized products and other financial services offerings.
"I built a tokenized equity that's permissioned, great — well, no one's using it, your customers don't care."
For Kraken, the bigger question is whether customers actually use the products, Sethi said.
Kraken also plans to expand beyond equities into tokenized products tied to commodities and credit fund yields, according to Sethi.
Acquisitions, leadership structure and a potential IPO
Sethi discussed Kraken's recent acquisition of Bitnomial, saying the deal gives it a full CFTC-licensed derivatives stack that could eventually support crypto perpetuals and later equity perpetuals for U.S. users.
Sethi also confirmed Kraken confidentially filed for an IPO last year, though he declined to share further details. He said Kraken is focused on building out a vertically integrated financial services business across trading, custody, asset management, and banking infrastructure.
Talking about Kraken's co-CEO structure alongside Dave Ripley, Sethi said the company frequently reworks internal processes in an effort to reduce layers and improve communication.
"Even things that we built two years ago to be better co-CEOs and de-layer — we threw away and we redid six months ago," Sethi said. "The things that we built six months ago, we threw away three weeks ago."
The Block's full interview with Arjun Sethi will be published later today.