Kraken xStocks

Issuing entity

Backed Assets (JE) Limited, First Floor, La Chasse Chambers, Ten La Chasse, St. Helier, JE2 4UE, Jersey. SPV incorporated 19 January 2024. Parent Backed Finance AG (CH); 100% of Backed Finance AG purchased by Payward Europe Limited (Ireland), a wholly owned subsidiary of Payward, Inc. (Kraken, US), on or around 5 January 2026.

Entity jurisdiction

Jersey (Channel Islands)

Governing law

Products and holder rights governed by the laws of Jersey; courts of Jersey have non-exclusive jurisdiction. The Registration Agreement (the ledger-based-securities form under Art. 973d et seqq. Swiss Code of Obligations) is governed by Swiss law. Account control agreements are Swiss / New York / English law depending on the custodian's domicile.

Regulatory status

Base Prospectus approved by the Liechtenstein Financial Market Authority (FMA) on 8 May 2026 under EU Prospectus Regulation 2017/1129, valid to 7 May 2027, passported into 29 EEA states. JFSC has consented under Arts. 2 and 4 of the Control of Borrowing (Jersey) Order 1958 and the issuer is registered with the JFSC under the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008 — but the prospectus states expressly that 'this consent does not give the issuer a regulated status'. Swiss offering limited to professional investors under Art. 4(3)-(5) FinSA. EU/EEA distribution is via a Cyprus-regulated investment firm (xstocks.fi).

Holder claim

The holder owns a bearer debt instrument classified as a tracker certificate — a ledger-based security (Registerwertrecht) giving a claim against the Issuer for a cash Redemption Amount tracking one share of the underlying. The holder has a sole claim to the Collateral allocated to that specific Product (via a pledge held by a Security Agent) and no claim to other Products' collateral or to the Issuer's other assets; no shareholder, dividend, participation or voting rights. The prospectus route is cash-settled and excludes physical delivery. Separately, the operational xPort channel lets a participant onboarded with both Backed and Alpaca send tokens from a whitelisted wallet and receive the corresponding shares in that participant's Alpaca brokerage account; this is a gated primary-market service, not an unconditional right carried by the token.

Underlying custodian

Per product Final Terms, the current Base Prospectus names as Custodians: InCore Bank AG (Swiss custodian; contractually barred from securities lending or proprietary transactions with the Underlyings and from asserting liens), Maerki Baumann & Co. AG, GTN Europe Financial Services Limited (UK, FCA firm reference 1003343) and — as U.S. Custodian — Alpaca Crypto LLC, a FinCEN-registered money services business in San Mateo, California, which may hold Investor cryptocurrency in omnibus accounts and delegate custody functions to sub-custodians at its own discretion. Alpaca Securities LLC is named in the same prospectus not as Custodian but as U.S. Broker (SEC-registered broker-dealer, FINRA member, SEC Rule 15c3-3 compliant) and as Prime Borrower under the Master Securities Lending Agreement. DISCREPANCY: the TSLAx product page (stamped 'Last updated on June 30, 2025') still lists Alpaca Securities LLC under 'Custodian' and does not mention Alpaca Crypto LLC at all. Issuer may change custodians and custody jurisdictions at its sole discretion on notice.

Available

Yes

Eligibility

Investor Put Option exercisable at any time by any Investor, but acceptance is conditional on successfully completing the Issuer's KYC/AML procedures, and the Issuer may reject a redemption request on negative findings. Primary-market access requires onboarding with the issuer and only whitelisted wallets may interact with the platform. Qualified Professional Investors may subscribe directly; all investor segments may go through an Authorized Participant.

Route / rails

The prospectus Investor Put route is cash settlement in the Settlement Currency (optionally other fiat or cryptocurrencies at the Issuer's sole discretion) by T+5 from receipt of the tokens; tokens are de-activated and collateral liquidated, and physical delivery is excluded for that route. Separately, xPort is a live in-kind channel: a client onboarded with both Backed and Alpaca sends xStocks from a whitelisted wallet, Backed processes them, and Alpaca returns the corresponding underlying shares to the client's brokerage account. xPort is advertised as 24/5 with fees currently set to zero.

KYC

Yes

Minimum

USD 5,000 per transaction when issuing or redeeming directly with the Issuer (xStocks FAQ), retail users included; no minimum is imposed by the Issuer on secondary markets. The Base Prospectus itself sets no size floor — fractional ledger-based securities are possible, the Redemption Amount must be at least the smallest denomination of the Settlement Currency, and excess rounding amounts are kept by the Issuer — so the 5,000 floor exists only in the FAQ.

Fees

Per-product (TSLAx product page): issuance/redemption up to 0.50% of investment value; management fee up to 0.25% p.a. (currently none). The Base Prospectus caps are an order of magnitude higher: Investor Fees for issuance and redemption 'of up to 5% of the market price of the Underlying' (s.1.3 definitions), and a surcharge on issue and redemption price that 'shall not exceed 5% of the redemption price and/or a Management Fee, which shall not exceed 5% p.a.' (s.3.1.1.8). The product-page figures are current values, not ceilings.

Timing

Not established

Transfer mechanism

permanent-delegate

US persons excluded

Yes

Collateral ratio

1:1+buffer

Composition

may-include-other

Rehypothecation

permitted

Bankruptcy remote

Not established

Security interest

Yes

Verification type

chainlink-por

Verification agent

The Network Firm (attestation API with read-only access to Backed's custody bank accounts); relayed on-chain by Chainlink Proof of Reserve

Verification frequency

Updated daily, or whenever reserve volume changes by more than 10%

Verification notes

The official v2 API publishes timestamped sharesHeld, circulatingSupply and per-provider holdings; providers observed on 2026-09-20 include Alpaca and GTN. A complete paginated read returned 826 symbol rows for 828 current registry products even though the pagination metadata claimed 926: FGDLx and NWGx were absent. Of the 826 returned rows, 725 reported positive circulation and 101 reported zero; none reported sharesHeld below circulatingSupply. This resolves the former REST-endpoint gap, but it is issuer-served, symbol-keyed data rather than a signed independent report or an exact-mint attestation. No per-ticker Solana Chainlink PoR feed address could be confirmed from a primary source, and no signed periodic attestation report PDFs (AICPA examination or AUP) were found. The prospectus also promises lent-underlying amounts 'on a regular basis on their website' and none were found in this endpoint or on product pages. No public smart-contract audit was found.

How custody affects DeFi enforcement →

Dividends

reinvested

Voting

none

Corporate actions

Handled by an on-chain rebasing multiplier. Cash dividends are reinvested into additional shares of the same stock, net of applicable withholding taxes, and the multiplier increases; splits increase and reverse splits decrease the multiplier proportionally. On Solana the multiplier lives in the Token-2022 scaledUiAmountConfig extension (verified on-chain: AAPLx multiplier 1.0026642075893797 with a scheduled newMultiplier 1.0032690125398187) rather than by minting/burning supply. Delisting is not addressed in the public docs pages but IS addressed in the Base Prospectus: a delisting is an Adjustment Event under Terms and Conditions clause IX.i, and if the Underlying ceases to be traded or publicly quoted and is not immediately re-quoted this is a Termination Event at the Issuer's sole discretion under clause IX.iii, whereupon the Product is terminated and the Issuer pays what it alone determines is the fair market value. Mergers are never named; clause IX.v extends the same rules mutatis mutandis to any event that 'in the sole opinion of the Issuer' has an equivalent effect. Under clause IX.vi the consent of Investors is not required for any of these changes.

Pricing

reference market: exchange-nbbo · arbitrageable: true · notes: Chainlink is the official oracle infrastructure for xStocks pricing. Primary-market issuance/redemption against the issuer at underlying value provides the arbitrage channel, but only for KYC'd, whitelisted participants and Authorized Participants — retail secondary holders cannot arbitrage directly. Prospectus commits the Issuer to publish an explanation if an exchange-listed Product trades at +/-2% or more to the underlying for seven consecutive trading days.

• Base Prospectus, Backed Assets (JE) Limited, dated 8 May 2026 (FMA-approved, valid to 7 May 2027)
• Base Prospectus First Supplement (2026-07-27)
• Securities Note (2025-05-08)
• Securities Note Second Supplement (2025-11-17, incl. consolidated Securities Note)
• Consolidated Registration Document (2026-01-30)
• Legal documentation index (all prospectuses, supplements, archive)
• xStocks docs — Product Legal Overview
• xStocks docs — Issuance and Redemption
• xStocks docs — Dividends and Stock Splits
• xStocks docs — How xStocks Work
• Chainlink Proof of Reserve is now active (names The Network Firm, daily / 10% update rule)
• Proof of Reserves dashboard
• Tesla xStock product page (ISIN CH1436219252, custodians, fees)
• xstocks.fi (US-persons and UK exclusion, venue list, 100+ stocks and ETFs)
• xStocks are going live: Tokenized Stocks for the DeFi Era (launch 2025-06-30)
• Backed Assets Terms of Service (PDF, last updated 2025-11-18) — the only document that carries the Registration Agreement (the Art. 973d CO ledger-based-securities form) and the Terms and Conditions of the Offer of Securities as Exhibit A, and the only place the Retail / Qualified / API user categories are defined
• Kraken xStocks Risk Disclosure — the distribution chain in Kraken's own words (Backed Assets (JE) Limited as Issuer, Payward Digital Solutions Ltd. under the Bermuda Monetary Authority as the offering entity), the geo exclusions (US, Canada, UK, Australia), and the only statement that the holder also carries Kraken's own credit and solvency risk as broker and initial custodian
• Kraken xStocks FAQ (support, last updated 2026-04-08) — the venue-side mechanics nothing else publishes: the rebasing arithmetic (net dividend after 30% US withholding divided by the prior close, multiplier updated ~20:00 EST before the ex-date), which 10 xStocks trade 24/7 on Kraken Pro, and the 110+ eligible countries
• xStocks FAQ (docs.xstocks.fi) — the only published source for the USD 5,000 minimum transaction size for issuance or redemption with the issuer, that retail users may redeem directly, and that primary issuance/redemption runs 24/5 while secondary trading runs 24/7

Inspect source freshness and individual claims →

• Does Backed actually publish the amount of Lent Underlyings 'on a regular basis on their website' as the prospectus promises? Not found on the product pages or the PoR dashboard — and whether lending is enabled per-Product is set in each product's Final Terms, which could not be downloaded (the product page's document links are unpopulated placeholders).
• Are the per-ticker Chainlink Proof of Reserve feeds live on Solana specifically, and what are their feed account addresses? Only the marketing claim and the SPA dashboard were verifiable.
• Are there signed periodic attestation reports (AICPA examination or agreed-upon-procedures) from The Network Firm for xStocks, or only the live API feeding Chainlink? No report PDFs were found.
• Which product Final Terms name which custodian, and what share of collateral sits in the US structure (Alpaca) versus Swiss (InCore, Maerki Baumann) versus UK (GTN Europe)?
• Is the structure genuinely bankruptcy-remote? The prospectus never uses the phrase — it describes an SPV plus a per-product pledge and account control agreement. The xStocks docs page claims bankruptcy-remoteness. Treated here as null pending a legal opinion.
• Has the Kraken/Payward acquisition changed key custody, and who beneficially controls the four members of Squads multisig 8gep9m2... and the separate mint/delegate keys? The freeze/pause mechanics are now resolved as a 2-of-4 multisig with no timelock, but member identities remain unpublished. The rebase key S7vYFF... is one of those members while retaining a separate unilateral rebase power.
• ANSWERED (2026-09-20): xPort means token-for-share, not token-for-token. The current official xPort page says a dually onboarded Backed/Alpaca client sends xStocks from a whitelisted wallet and Alpaca returns the corresponding underlying shares to that client's brokerage account. The prospectus Investor Put remains cash-settled and excludes physical delivery, so these are distinct gated primary-market routes rather than an unconditional bearer redemption right.
• What is the current legal and operational status of IVZx, GMEDx, DOCUx, ARWRx and the older TEFx mint Xszk5DE...? All five use the ordinary xStocks mint, freeze and permanent-delegate authorities, remain unpaused, have non-zero on-chain supply and still return issuer-hosted metadata, but none appears in the current public asset registry. Four symbols are absent from the reserve feed. TEFx has been replaced in the registry by mint XsUShG8..., while the symbol-only reserve row cannot distinguish old from new. Can holders of the old addresses still use the cash Investor Put or xPort, and if not, what process extinguishes those outstanding tokens?
• Has Backed's custody arrangement actually been amended to bind it to follow token-holder voting instructions? A secondary report (crypto.news, https://crypto.news/kraken-xstocks-tokenized-equity-voting-rights/, article footer 'Published August 6, 2026' and cited elsewhere in this dossier as 7 August 2026) says the contractual terms of Backed Assets (JE) Limited's custody arrangement were updated to create a binding obligation to vote the underlying shares per instructions submitted through Kraken accounts and aggregated on Ink. No primary source for it was found: the FMA-approved Base Prospectus, the xStocks docs, the xStocks FAQ, Kraken's live risk disclosure and Kraken's support FAQ all still say the tokens confer no voting rights as at 2026-09-18. The dossier's voting: "none" stands until a primary source appears; if one does, voting, holderClaim and the titleDeed/attestation wording all change.