Cryptocurrencyexchange Kraken held discussions with the Securities and Exchange Commission's(SEC) Crypto Task Force this week about launching a tokenized trading systemfor stocks and other assets, according to regulatory filings released yesterday(Monday).Kraken Pitches TokenizedTrading System to SEC Crypto Task ForceThe meetingbrought together four Kraken executives and two attorneys from law firm WilmerCutler Pickering Hale and Dorr to discuss what the exchange describes as aproposal for tokenizing traditional assets. The talks focused on the technicalarchitecture of such a system, regulatory requirements, and potential marketbenefits.Kraken'spitch comes at a time when traditional exchange operators and internationalregulators are pushing the SEC to take a harder line against tokenized stockofferings. Industryassociations argue these products lack the investor protection safeguardsthat exist in conventional markets.The timingputs Kraken in an awkward position. Theexchange launched tokenized US stock trading for international customers in May,allowing round-the-clock access to American equities. But established marketplayers worry this 24/7 trading model undermines existing market structure andregulatory oversight.BREAKING: Wall Street is officially onchain.xStocks are now live on Kraken ❎ 60 U.S. equities tokenized and tradable 24/5. More coming soon.We’re not waiting for the future. We’re building it.👇https://t.co/iKu44ZiwZNNot available in the U.S. or to U.S. persons. Geo… pic.twitter.com/FjOsxDJ9se— Kraken (@krakenfx) June 30, 2025"Thetopic discussed was approaches to addressing issues related to regulation ofcrypto assets," according to the SEC's meeting memorandum. Krakenrepresentatives outlined plans for a tokenized trading system and soughtguidance on legal frameworks for operating such a platform in the UnitedStates.Theexchange's agenda included three main areas: explaining the technicalcomponents of tokenized trading, examining relevant securities law provisions,and discussing how regulators could provide clarity while encouraginginnovation. Kraken argued that tokenization could enhance capital formation anddemocratize market access.Industry Pushback AgainstTokenized ProductsTraditionalmarket operators aren't buying it. Global regulators and exchange associationshave urged the SEC to crack down on tokenized stocks, citing concerns aboutmarket integrity and investor protection. They point out that tokenizedproducts operate outside normal trading hours and regulatory frameworks.Thetokenized stock market remains relatively small. Total circulation sits ataround $360 million, down 11% over the past month, according to RWA.xyz data.That represents just 1.35% of all tokenized real-world assets, which totalapproximately $26.5 billion across blockchain networks.But Krakenand other proponents see massive potential. Binance research suggests tokenizedstocks could become a trillion-dollar opportunity if just 1% of global equitymarkets move onto blockchain platforms. That would push the sector past $1.3trillion in market capitalization.Platform Expansion DespiteRegulatory UncertaintyTheexchange has been expanding its tokenized offerings despite regulatoryuncertainty. Last week, Krakenannounced it was bringing tokenized stocks to the Tron blockchain,broadening access beyond its initial Ethereum-based platform.CompetitorRobinhood also offers tokenized stock trading, launchingthe service for European Union customers in June. Both platforms targetinternational investors who want exposure to US equities without traditionalmarket restrictions.Kraken'sconsumer business head Mark Greenberg told reporters in July that tokenizedstocks should offer new levels of accessibility and programmability rather thansimply replicating existing Wall Street systems on blockchain networks.Investor Sentiment andRegulatory OutlookIndustrysurveys suggest investor appetite for these products. A recent Kraken pollfound that 65% of 1,000 US investors who trade both stocks and crypto expectcryptocurrency to outperform equities over the next decade.The SECmeeting included Kraken's head of consumer business, global policy chief,senior regulatory counsel, and regulatory policy manager. The exchangerequested the meeting to discuss tokenization approaches, though the SEC memodoesn't indicate whether regulators expressed support for Kraken's proposals.Whether theSEC will provide the regulatory clarity Kraken seeks remains unclear. Theagency has generally taken a cautious approach to crypto-related products,particularly those that blur lines between traditional securities and digitalassets.This article was written by Damian Chmiel at www.financemagnates.com.