The world’s largest market maker is back at writing letters. Yesterday, Citadel Securities filed a 13-page broadside arguing that DeFi venues trading tokenized stocks are, in substance, exchanges and brokers, and should be regulated as such. No safe harbors, no “we’re just code”, no carve-outs.

It’s no shocker that a top beneficiary of payment-for-order-flow isn’t thrilled about DeFi eating into equity rails.

Yet despite some arguable flaws in its core arguments, the letter opens a useful debate around tech-neutral regulation. And having Citadel Securities go on record acknowledging the benefits of tokenization (self-custody, 24/7 transferability, atomic settlement) certainly signals another incumbent lowering its shield.

Today, we’ll also talk about:

• Kraken to acquire xStocks company Backed Finance

• Ethereum activates Fusaka upgrade

• WisdomTree leverages Lido for staked ETH ETP

Kraken to Acquire Backed Finance to Drive Tokenized Assets Expansion

M&A: On Tuesday, Kraken announced the acquisition of Backed Finance AG, the Swiss tokenization specialist behind the xStocks standard for tokenized equities. While financial terms were not disclosed, the deal marks Kraken’s fifth acquisition in 2025 and follows its recent $800 million capital raise valuing the exchange at $20 billion.

• Why it matters: Although Kraken is among the industry’s longest-standing exchanges, its spot-trading business has sat near 3% market share for years. The firm is now leaning into tokenized assets as a new growth vector, aiming to bridge centralized and onchain markets. By acquiring Backed, Kraken brings key tokenization capabilities in-house and accelerates that push.

Tokenized equities: Launched in June, Backed’s xStocks wraps traditional equities such as Tesla, Amazon, or Apple into 1:1-backed tokens that can be held in self-custody or used across DeFi. Since launch, the standard has generated more than $12 billion in combined exchange and onchain trading volume, attracted 47,000 unique wallets, and issued over $180 million in tokenized value, making Backed the second-largest issuer after Ondo.

• “The beauty of wrappers like xStocks is that they are bearer assets that can be exchanged with far fewer constraints than traditional stocks, similar to stablecoins. It opens the door to an entirely new client base,” Adam Levin, co-founder and CEO of Backed, told Blockstories.

Existing partnership: Kraken is not starting from scratch. Roughly one third of all xStocks issued today already sit on the Kraken exchange, which has acted as a key distribution venue alongside platforms such as Bybit.

Independence: Asked whether Backed will continue to serve other exchanges after the acquisition, Levin said the standard will remain open.

• “The Backed team will continue operating as one with a degree of independence. Kraken does not view xStocks as a Kraken product, but as a crypto standard they want the entire industry to adopt.”

• “Scaling tokenized equities requires substantial distribution reach, regulatory capacity and liquidity. Kraken brings all three, including the MiFID framework already used to distribute xStocks in Europe,” he added.

Partnership with Deutsche Boerse: Institutional adoption is now part of that expansion. Yesterday, the exchange announced a partnership with Deutsche Börse Group, Europe’s largest market infrastructure operator. Under the agreement, xStocks will be integrated into 360X, Deutsche Börse’s venue for tokenized real-world assets. It is one of the first instances of a major exchange group adopting a crypto-native tokenization standard.

What’s next: Kraken indicated that xStocks will not remain limited to equities. In its announcement, the company noted that the acquisition “lays the groundwork for future innovation in tokenized assets beyond equities, advancing our leadership in building open, interoperable financial infrastructure.”

Ethereum’s Fusaka Upgrade Goes Live on Mainnet

Two in a row: Just seven months after Pectra, Ethereum successfully activated its next major upgrade, Fusaka. Live since Wednesday, it focuses on scaling the Layer 2 ecosystem and strengthening value capture from rollups while preserving the network’s decentralization.

Why it matters: In terms of scope, Fusaka matches Pectra as one of Ethereum’s largest upgrades to date, with both introducing twelve significant changes.

• “Delivering two upgrades of this scale in a single year is unprecedented and reflects a clear improvement in how quickly and effectively Ethereum core teams are now executing," Preston Van Loon, a long-standing Ethereum Core Developer at Offchain Labs, told Blockstories.

Scaling Layer 2s: At the heart of Fusaka is PeerDAS, a change that makes it more efficient for Ethereum to handle the data Layer 2s publish to the network. Instead of having every node process all rollup data, the network now distributes that load across participants. This allows Ethereum to support much higher rollup activity without raising hardware requirements for node operators, improving scalability while preserving decentralization.

New rollup economics: Fusaka also fixes a long-standing issue with how Layer 2s pay for using Ethereum. Since blob space was introduced in 2024, the pricing mechanism kept fees very low, effectively letting rollups use Ethereum almost for free. Fusaka corrects this by introducing a minimum fee for blob data.

• Revenue implications: According to a simulation by Fidelity Digital Assets, this new pricing mechanism would have generated higher fees for Ethereum on 93% of the days since blobs were introduced, adding an estimated 24,641 ETH, or roughly $78 million, in additional revenue.

Increased agility: Beyond pricing, Fusaka gives Ethereum a faster way to expand its data capacity. Instead of waiting for a full network upgrade, developers can now raise the limits through small, targeted adjustments. This allows Ethereum to respond much more quickly when demand from Layer 2s increases.

• "Such changes allow us to move faster when the market demands it, letting us go from the overly conservative stance we once held at the EF," Van Loon said.

Better UX: Additionally, Fusaka introduces a clear UX improvement. With native support for a widely used cryptography standard, wallets will soon be able to sign transactions using FaceID, fingerprints, or the secure enclave on regular smartphones. According to Van Loon, this “essentially turns every smartphone into a hardware wallet.”

What's next: With Fusaka complete, Ethereum’s core developers have already shifted focus to the network’s next major release, Glamsterdam, scheduled for next year.

What’s the news?

• Yesterday, asset manager WisdomTree launched its fully staked ETH ETP. The WisdomTree Physical Lido Staked Ether ETP (LIST) is the first European product to hold only stETH, the liquid staking token (LST) minted through the liquid staking provider Lido.

• LIST begins trading with roughly $50 million in AuM and is listed on Deutsche Börse Xetra, SIX Swiss Exchange, and Euronext in Paris and Amsterdam.

Behind-the-scenes: We spoke with Kean Gilbert, Lido’s Head of Institutional Relations, about the benefits of an LST-based ETP and why WisdomTree chose Lido’s infrastructure.