Understanding how your assets are protected, the legal structure behind xStocks, and the risks involved.
xStocks are issued by Backed Finance AG, a Swiss-regulated entity. Each xStock is a debt instrument (structured note) backed 1:1 by the corresponding underlying security held with regulated Swiss custodians.
Replica Finance operates as a technology layer that provides access to xStocks. Replica does not custody user assets — users hold xStocks directly in their non-custodial wallets.
xStocks are issued by Backed Finance AG, now a subsidiary of Kraken. Backed is regulated under Swiss financial law and operates under supervision of Swiss authorities.
Replica is a distribution and portfolio management layer. We provide the interface, portfolio curation, and copy-trading functionality. The underlying xStock tokens are issued and managed by Backed Finance. Replica does not hold or custody user funds.
The shares backing xStocks are held with regulated Swiss custodian banks:
Assets are segregated from the issuer's operating accounts.
Backed Finance provides regular attestations of reserves. The backing of each xStock can be verified on-chain and through Backed's transparency reports.
xStocks are backed 1:1 by the underlying securities. Additional reserves may be held as a buffer, but the primary structure is full 1:1 backing.
Yes. You can redeem your xStocks at any time for their current market value. The redemption process:
In extreme market conditions, there may be temporary delays, but the 1:1 backing ensures your xStocks maintain their fundamental value.
xStocks are designed to be bankruptcy-remote. The underlying assets are held in segregated custody accounts with regulated Swiss banks. In the event of issuer insolvency:
However, this is not equivalent to government deposit insurance. Investors should understand that risks exist, including operational, regulatory, and counterparty risks.
Your xStocks are held in your non-custodial wallet, not by Replica. If Replica ceases operations:
This is a key benefit of non-custodial architecture.
xStocks are not insured by government deposit insurance (such as FDIC in the US, FSCS in the UK, or similar schemes). This is a fundamental difference from traditional bank deposits or brokerage accounts.
However, structural protections exist:
These protections reduce but do not eliminate risk. Investors should understand they bear counterparty, operational, and regulatory risks.
Dividends and corporate actions are reflected in the token value. You receive the economic benefit without needing to take any action.
This structure simplifies administration while preserving full economic exposure to the underlying security.
| Risk Type | Description |
|---|---|
| Market risk | xStock value moves with underlying stock price |
| Counterparty risk | Backed Finance issuer risk |
| Regulatory risk | Changes in securities law or crypto regulation |
| Smart contract risk | Potential vulnerabilities in token contracts |
| Liquidity risk | Redemption delays in extreme market conditions |
xStocks are structured as debt instruments (notes) that provide economic exposure to underlying securities. They are offered under Regulation S exemptions and are not registered with the SEC. xStocks are not available to US persons.
xStocks are not available to:
Eligibility is verified during KYC onboarding.
All users must complete identity verification (KYC) before accessing xStocks. This includes:
We work with regulated compliance providers to ensure adherence to anti-money laundering requirements.
xStocks are transferable on-chain, subject to restrictions. Transfers to wallets in restricted jurisdictions are prohibited under our Terms of Service. We employ monitoring to detect and prevent prohibited transfers.
xStocks used on Replica are deployed on Solana, offering fast transactions and low fees.
Backed Finance's smart contracts have been audited by independent security firms. Audit reports are available in Backed's documentation.
Audit status and reports will be published when available.
Replica creates a non-custodial wallet for you during signup, secured by your Google account. You don't need to manage seed phrases or install external wallet software.
Your assets are held in a non-custodial wallet linked to your account credentials. If you lose access:
Because assets exist on the blockchain, they cannot be lost due to platform issues—only access can be temporarily interrupted.
| Report Type | Frequency | Content |
|---|---|---|
| Portfolio value | Real-time | Current holdings and performance |
| Transaction history | On-demand | All buys, sells, rebalances |
| Backing verification | Via Backed | Proof of reserves |
You can verify xStock backing through:
Review our full legal documentation or reach out to our team.