Report on the Strategic Imperative for Tokenized Assets in Advancing Sustainable Development Goals

Executive Summary

A strategic vision for the tokenization of traditional financial assets has been articulated, emphasizing a fundamental redesign of financial infrastructure rather than a simple migration of existing systems to blockchain technology. This report analyzes this approach through the lens of the United Nations Sustainable Development Goals (SDGs), highlighting how a reimagined financial system can drive progress on innovation (SDG 9), reduce inequalities (SDG 10), and foster economic growth (SDG 8). The initiative by Kraken and Backed Finance serves as a case study for developing globally accessible, compliant, and programmable capital markets that align with sustainable development principles.

Aligning Tokenization with Sustainable Development Goals (SDGs)

The core argument presented is that tokenized equities must not be a mere replication of “Wall Street on a blockchain.” Instead, they should serve as a catalyst for a more inclusive and efficient global financial system. This vision directly supports several key SDGs.

SDG 9: Industry, Innovation, and Infrastructure

The call to rebuild financial infrastructure to be as “fluid and programmable as crypto” is a direct embodiment of SDG 9, which advocates for building resilient infrastructure and fostering innovation.

• Fostering Innovation: The approach critiques merely “wrapping old assets in new tech,” advocating instead for a foundational reconstruction of financial access. This promotes genuine innovation over superficial technological application.
• Resilient Infrastructure: The development of “base-layer systems that are permissionless and composable” aims to create a more robust, adaptable, and resilient financial infrastructure compared to legacy systems.

SDG 10: Reduced Inequalities

A primary objective of this new financial model is to democratize access to global markets, a goal central to SDG 10, which aims to reduce inequality within and among countries.

• Global Accessibility: The ideal outcome is a system that is “always on, self-directed, and globally accessible,” breaking down the geographical and institutional barriers that currently exclude many from participating in global capital markets.
• Financial Inclusion: By enabling users to trade tokenized shares of global companies via platforms like Kraken, Bybit, and Solana-based protocols, initiatives such as xStocks directly contribute to greater financial inclusion.

SDG 8 and SDG 16: Economic Growth and Strong Institutions

The framework for tokenization also addresses the need for sustainable economic growth and the development of effective, accountable institutions.

1. Economic Growth (SDG 8): A more efficient, accessible, and fluid capital market can unlock new investment opportunities and allocate capital more effectively, thereby promoting sustained and inclusive economic growth.
2. Strong Institutions (SDG 16): The advocacy for “programmable and compliant open infrastructure” highlights the importance of balancing innovation with regulation. This supports the development of transparent and accountable financial institutions, ensuring that regulatory frameworks evolve to protect users without stifling progress.

Strategic Implementation and Industry Context

Case Study: The xStocks Initiative

The collaboration between Kraken and Backed Finance to launch xStocks exemplifies the practical application of these principles. Key features include:

• Asset Tokenization: The product enables trading of tokenized shares from major companies like Netflix, Meta, and Coinbase.
• Multi-Platform Availability: Access is provided through centralized exchanges (Kraken, Bybit) and decentralized protocols (Solana), maximizing reach.
• Bridging Ecosystems: The initiative is designed to bridge traditional markets with the decentralized finance (DeFi) ecosystem, creating new opportunities for developers to build applications.

Broader Industry and Regulatory Landscape

The movement towards reimagining financial systems is not isolated. Other major platforms, such as eToro, are pursuing similar goals by tokenizing U.S. stocks on the Ethereum blockchain. This industry-wide trend is complemented by proactive engagement with regulatory bodies. The recent discussions between Ethereum-aligned organizations and the Securities and Exchange Commission (SEC) underscore a collective effort, aligned with SDG 17 (Partnerships for the Goals), to establish frameworks that merge blockchain innovation with traditional regulatory requirements, ensuring a stable and sustainable transition.

SDGs Addressed in the Article

SDG 8: Decent Work and Economic Growth

• The article discusses the creation of new financial products and infrastructure, such as Kraken’s xStocks, which aim to “democratize access to global markets.” By expanding access to financial services and investment opportunities, this initiative supports economic growth and allows more individuals to participate in the global economy.

SDG 9: Industry, Innovation, and Infrastructure

• The central theme of the article is the technological innovation within the financial industry. Mark Greenberg’s argument to “rebuild financial infrastructure to be as fluid and programmable as cryptocurrencies” directly addresses the goal of building resilient and innovative infrastructure. The development of “programmable and compliant open infrastructure” and platforms on Solana and Ethereum represents a significant upgrade to financial systems.

SDG 10: Reduced Inequalities

• The article strongly emphasizes increasing financial inclusion. Greenberg’s vision for tokenized assets is to make them “always on, self-directed, and globally accessible,” which aims to reduce the barriers that prevent people in different parts of the world from accessing traditional financial markets like Wall Street. The goal is to create a more “inclusive and flexible financial infrastructure.”

SDG 16: Peace, Justice, and Strong Institutions

• The discussion on regulation highlights the need for effective and transparent institutions. The article mentions Kraken’s advocacy for “programmable and compliant open infrastructure” and the need for regulations to “evolve to support this balance, not suppress it.” The engagement of Ethereum-aligned organizations with the Securities and Exchange Commission (SEC) to discuss regulatory frameworks also points to efforts to build accountable and transparent governance for these new markets.

SDG 17: Partnerships for the Goals

• The article provides clear examples of partnerships aimed at achieving these technological and financial goals. The collaboration between Kraken and Backed Finance to launch xStocks is a key example of a private-sector partnership. Furthermore, the meeting between industry organizations and the SEC represents a public-private partnership aimed at creating a sustainable regulatory environment for tokenized assets.

Specific Targets Identified

Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.

• The article’s focus on using tokenization to “democratize access to global markets” and create a “globally accessible” financial system directly aligns with this target. The launch of xStocks, which allows users to trade tokenized shares, is a practical example of expanding access to financial (investment) services for a broader audience.

Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all.

• The core argument to “rebuild financial infrastructure” using blockchain technology to be more accessible and global directly supports this target. The article describes the creation of “base-layer systems that are permissionless and composable,” which represents the development of new, resilient, and equitable transborder financial infrastructure.

Target 10.2: By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.

• The push for tokenized equities to offer “greater accessibility” and “global reach” is aimed at overcoming the limitations of “legacy markets.” This promotes the economic inclusion of individuals who may have been previously excluded from traditional stock markets due to geographic or economic barriers.

Target 16.6: Develop effective, accountable and transparent institutions at all levels.

• The article addresses the need for a new regulatory approach, with Kraken advocating for “programmable and compliant open infrastructure.” The call for regulations to evolve to support innovation while ensuring “user protections remain intact” reflects the goal of developing more effective and transparent institutional frameworks for capital markets.

Target 17.17: Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.

• The article explicitly mentions partnerships driving this innovation. The “collaboration with Backed Finance” to launch xStocks is a private-private partnership. The convening of “Ethereum-aligned organizations with the Securities and Exchange Commission” is an example of a public-private dialogue essential for achieving the goals.

Indicators Mentioned or Implied

Implied Indicator for Target 8.10 & 10.2: Proportion of population with access to tokenized financial products.

• While not explicitly stated, the success of initiatives like xStocks can be measured by the number and geographic diversity of users who can access and trade tokenized equities. The article’s emphasis on “global reach” and “democratiz[ing] access” implies that tracking the expansion of the user base is a key metric for progress.

Implied Indicator for Target 9.1: Volume and value of traditional assets tokenized on new blockchain infrastructures.

• The article mentions Kraken’s tokenization of shares like Netflix and Meta, and eToro’s plan to “tokenize 100 U.S. stocks.” An implied indicator of the development of this new infrastructure is the growth in the number and total market value of assets being moved onto these blockchain-based platforms.

Implied Indicator for Target 16.6: Establishment of regulatory frameworks for tokenized assets.

• The article’s discussion of regulatory concerns and the engagement with the SEC points to the need for new rules. An indicator of progress towards effective institutions would be the development and adoption of clear, “evolved” regulations that balance innovation with compliance and user protection for tokenized securities.

Implied Indicator for Target 17.17: Number of cross-sector partnerships for financial innovation.

• The article cites specific collaborations, such as “Kraken’s recent collaboration with Backed Finance” and the meeting between industry groups and the SEC. The number of such partnerships formed between fintech companies, traditional finance entities, and regulatory bodies serves as an indicator of progress in building a collaborative ecosystem for financial innovation.

Table of SDGs, Targets, and Indicators

Source: ainvest.com