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Kraken Lets Traders Use Tokenized Stocks As Collateral For Leveraged Trades

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Kraken Lets Traders Use Tokenized Stocks As Collateral For Leveraged Trades
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Certain tokenized equities and exchange-traded funds (ETFs) are now accepted as collateral for futures and margin trading on cryptocurrency exchange Kraken, enabling qualified customers to establish leveraged positions without having to liquidate their holdings.

Ten tokenized stocks and ETFs, including Apple, Nvidia, Tesla, Strategy, the SPDR S&P 500 ETF, and Invesco QQQ Trust, are initially supported by the functionality. Those holdings can be posted as collateral by qualified users without previously being sold. A collateral haircut is applied to each qualifying asset, lowering its lending value according to risk.

While more volatile equities like Strategy and Robinhood are devalued by 30%, broad-market ETFs incur the lowest haircut of 10%. Kraken has established collateral limitations for each asset, capping most individual stocks at $250,000, tokenized gold and Circle shares at $100,000, and broad-market ETFs at up to $1 million.

According to the exchange, both collateral restrictions and haircuts are subject to change and will be examined on a regular basis. Only qualified clients from outside the US can use this function.

 

 

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Written by
Kapil Rajyaguru -

Kapil Rajyaguru is a news editor at 3.0 TV with over 15 years of professional writing experience and more than four years dedicated to the cryptoverse.

An engineer by education and a writer by passion, Kapil brings a rare mix of technical insight and storytelling finesse. A firm believer that cryptocurrencies, blockchain and AI are the building blocks of the future, he crafts in-depth news and analysis to educate, empower and prepare the masses for the next frontier of Web3.

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