Latest news with #tokenizedstocks
Yahoo
2 days ago
- Business
- Yahoo
Tokenized stocks are the next big fintech buzzword. Are they an innovation or a regulatory loophole?
At the end of June, Robinhood CEO Vlad Tenev stood in front of a reflecting pool overlooking the Mediterranean, clad in a striped cream suit that made him look like a crypto bro version of Jay Gatsby. Speaking to a giddy Cannes crowd, Tenev reached into a briefcase. He pulled out a metal cylinder. 'I'm holding in my hands right now the keys to the first-ever stock tokens for OpenAI,' Tenev announced. 'I'd like to transfer these tokens to you,' he told the seated onlookers, who politely waved paper fans to survive the summer heat. Tenev's gambit was the highest-profile launch yet of an increasingly buzzy product in the world of crypto and fintech: tokenized stocks, which are traditional equities in a blockchain wrapper. Proponents argue that by tokenizing publicly traded shares like Apple and Tesla, investors will be more easily able to trade and access assets, including outside the U.S. Robinhood took an even bolder step by claiming that it could tokenize shares in private companies, like OpenAI and SpaceX, that are typically only available to the world's wealthiest through venture funds or secondaries. OpenAI did not take lightly to the announcement, posting on X a few days later that Robinhood's OpenAI tokens are not OpenAI equity. 'We did not partner with Robinhood, were not involved in this, and do not endorse it,' the company wrote. 'Please be careful.' Tenev admitted that Robinhood's OpenAI tokens are not 'technically' equity, but added that they still give retail investors exposure to private assets. (If you want a more thorough explanation on how it actually works, you can turn to the king, Matt Levine.) While Robinhood's flashy announcement was more marketing than anything, with the product still limited to the European Union, you can expect to be soon inundated with discourse about tokenized stocks, which has already permeated the crypto industry for several years. Until recently, any serious forays into the space were limited to blockchain companies like Kraken and Coinbase, but Robinhood represented a crossing of the Rubicon. Don't forget, after all, that Robinhood helped push its stodgy competitors into commission-free trading for retail customers. Securities and Exchange Commission chair Paul Atkins gave an interview the same day as OpenAI's post, saying that 'tokenization is an innovation,' and crypto-friendly commissioner Hester Peirce released a letter last week calling tokenized securities 'enchanting, but not magical.' As red-hot startups like OpenAI, SpaceX, and Stripe stay private for longer, companies from Robinhood to Forge have been trying to create new vehicles allowing retail customers to access them, from private market ETFs to tokenized stocks. But while these companies will tout such innovations as 'democratization,' they also come with the same risks associated with private companies—namely, a lack of disclosure and oversight. At a hearing last week on proposed crypto legislation, Sen. Elizabeth Warren (D-Mass.) argued that tokenized stocks will help companies evade SEC regulations, though Peirce later gave a statement that market participants must adhere to federal securities laws. The future of stock trading is around the corner. But if even OpenAI is telling you to be careful, you might want to read the fine print. Leo SchwartzX: @leomschwartzEmail: Submit a deal for the Term Sheet newsletter here. Sara Braun curated the deals section of today's newsletter. Subscribe here. This story was originally featured on
Coin Geek
7 days ago
- Business
- Coin Geek
Tokenized stocks explained: How Robinhood opened US markets
Getting your Trinity Audio player ready... Robinhood (NASDAQ: HOOD) recently announced that it would launch tokenized stocks on its very own layer 2 blockchain to its customers in the European Union. 'European customers will have access to 200+ US stock and ETF tokens. Stock token holders will also receive dividend payments directly in their app… Stock tokens will initially be issued on Arbitrum. [But] In the future, tokenized stocks will be facilitated by our very own Robinhood Layer 2 blockchain, based on Arbitrum,' said Robinhood in its official announcement. This move by Robinhood represents another instance of blockchain and digital asset products intertwining with the traditional financial system. But unlike some products, like stablecoins, where the road to adoption is murky at best, tokenized stocks have a clear, well-defined use case and an obvious appeal to retail consumers: the ability for individuals located outside the United States to easily get access and exposure to equities that trade on a U.S. stock exchange. What is a tokenized stock? A tokenized stock is basically a digital representation of a traditional equity. Instead of buying Apple (NASDAQ: AAPL) or Tesla (NASDAQ: TSLA) shares outright, you're buying a crypto token that mirrors the price of that stock. The token moves up and down in lockstep with the underlying shares. In some cases, it's backed 1:1 by an equivalent number of real shares held in reserve by a custodian, typically the brokerage offering the service. To be clear, when you buy a tokenized stock, you're not buying the actual stock itself. You are buying a synthetic version of the stock. For this reason, you typically won't have shareholder voting rights or all the regulatory protections of owning the security directly. You're buying a blockchain-issued digital representation, sometimes called a 'digital twin' of the share. Although this comes with the drawbacks you'd expect from owning a replica instead of the real thing, there are also numerous advantages, especially for individuals who would face obstacles going the traditional route to buying and holding equities via a U.S. brokerage. Why tokenized stocks are gaining momentum For starters, there are benefits that everyone trading tokenized stocks gets to enjoy. One of the biggest benefits is that tokenized stocks trade 24/7, while their traditional counterparts usually only trade during U.S. market hours (although this is starting to change, with many brokerages now supporting hundreds of stocks that trade 24/5 (24 hours a day, five days a week). But beyond that, and from an access perspective, the primary audience for tokenized stocks is international investors. In some countries, opening an American brokerage account involves a lot of paperwork and a long list of criteria that must be satisfied, such as residency requirements, proof and source of funds, tax documentation, and currency conversions. Even for qualified investors, this process can be a hassle, and for others, they simply don't have the necessary paperwork or materials to get approved to open a U.S. brokerage account. With tokenized stocks, that friction disappears. Investors can get exposure to companies listed on U.S. exchanges without navigating a complicated onboarding process or dealing with the middlemen in their countries, who might remove the obstacle of signing up but charge steep fees to access foreign markets. With tokenized stocks, all a person needs is an account on a platform that provides tokenized stocks—these platforms are usually region and country-specific to make them easily accessible—and an internet connection. The big winners in tokenized stock trading There are a few winners when it comes to tokenized stock trading. This is obviously a win for anyone who wants exposure to U.S. equities but would otherwise have trouble accessing them. Tokenized stocks let them reap many of the same benefits as traditional equity trading without requiring them to jump through all the hoops to sign up. Of course, the trade-off is that they don't enjoy the same rights and protections as direct shareholders. But the bigger 'winner' here is the companies offering tokenized stock trading, who are likely to see a significant increase in revenue thanks to their new tokenized stock offerings. Roughly 7.6 billion people live outside the U.S., and the World Bank estimates that about 5 billion are adults old enough to invest. Tokenized stocks have effectively allowed that entire audience to get exposure to U.S. equities. While investors benefit from the convenience, the platforms stand to gain even more from their patronage and the percentage of those 5 billion who join and spend money on their platform to tap into U.S. markets. This could have a domino effect, as some tokenized stock providers, like Robinhood, back each tokenized stock 1:1 with the actual equity. This means that if there is a big influx of individuals joining these platforms and buying U.S. equities, the newfound demand for U.S. stocks could lead to share prices rising. I would expect this to take place if there really is a large volume of individuals trading tokenized stocks, and if that does happen, I would expect the price increases to happen around the 'name-brand' companies that trade. The third winner is the blockchain and crypto industry itself. Tokenizing stocks on-chain further proves that crypto-native products are embedding deeper into the traditional financial system. The growing receptiveness to these offerings is a sign that meaningful innovation is happening in the blockchain and digital asset industry and that both industries are maturing. With the increasing popularity around stablecoins, and now, the early signs that tokenized stocks are a product brokerages are interested in offering, we are seeing a convergence between global demand for U.S. equities and the digital currency industry's ability to financially engineer new products that solve real-world problems and are therefore being met with real demand, which is an overwhelmingly positive development in a sector whose primary use case for several years was speculation. Watch: Reviving the true value of blockchain—utility title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen=""> European Union L2 Layer 2 Blockchain Robinhood Tokenization United States
Yahoo
09-07-2025
- Business
- Yahoo
OpenAI's warning sparks EU review of Robinhood's stock token
OpenAI's warning sparks EU review of Robinhood's stock token originally appeared on TheStreet. The Bank of Lithuania, which regulates Robinhood on behalf of the European Union, has begun an investigation into the company's newly announced tokenized equity products related to OpenAI and SpaceX. Robinhood Markets is a financial services company based in the U.S. that lets users trade stocks, ETFs, options, and cryptocurrencies without paying any fees through a simple mobile app and website. The central bank stated that it is "awaiting clarifications" from Robinhood regarding the legal structure and investor communication of the new offering. Giedrius Šniukas, a spokesperson for the central bank of Lithuania, told CNBC that they had contacted Robinhood and were investigating whether the products conform to EU financial rules.Šniukas, in an email, told CNBC, "The information for investors must be provided in clear, fair, and non-misleading language." The scrutiny is a result of a public warning issued last week by OpenAI, which stated that it had no involvement with Robinhood's purported "OpenAI tokens." OpenAI said in a statement on X: "These 'OpenAI tokens' are not OpenAI equity... We did not partner with Robinhood, were not involved in this, and do not endorse it." Robinhood launched tokenized stocks on June 30, providing EU-based users with blockchain-based access to shares, including those of private companies such as OpenAI and SpaceX. However, OpenAI emphasized that any transfer of its equity requires their approval, which was not given. Robinhood responded to OpenAI's concerns by stating that the tokens merely represent indirect exposure through its interests in a special purpose vehicle (SPV). Robinhood states that the product allows retail investors to access private markets. Robinhood did not comment further. At press time, Robinhood's stock (HOOD) is down 1.80% in the last 24 hours. OpenAI's warning sparks EU review of Robinhood's stock token first appeared on TheStreet on Jul 7, 2025 This story was originally reported by TheStreet on Jul 7, 2025, where it first appeared. Sign in to access your portfolio
Forbes
08-07-2025
- Business
- Forbes
How Crypto Is Powering Robinhood Stock's Surge
SUQIAN, CHINA - JULY 5, 2025 - A Robinhood LOGO displayed on a smartphone in Suqian City, Jiangsu ... More Province on China, July 5, 2025. (Photo credit should read CFOTO/Future Publishing via Getty Images) Robinhood Markets (NASDAQ:HOOD) stock rose by nearly 26% over the last month due to several significant developments. Most notably, the company introduced tokenized stocks, which are essentially blockchain-based equity derivatives allowing the trading of over 200 U.S. stocks and ETFs by customers in the European Union. In fact, the firm is providing tokens that are tied to the valuation of privately owned companies such as OpenAI and SpaceX for E.U. clients. Additionally, the company completed its acquisition of the global cryptocurrency exchange operator Bitstamp, which grants it over 50 active licenses and registrations globally. While Robinhood has been providing crypto trading services for several years, this acquisition enables the firm to strengthen its enterprise options, enhance its lending and staking infrastructure, and offer more specialized products tailored for hedge funds, fintechs, and registered investment advisors. The market has also been increasingly focused on the crypto narrative in recent months, driven by a more positive regulatory environment and increasing support from the Trump administration, which has contributed to the stock's performance. So, is HOOD appealing at its current price of around $95 per share? Robinhood stock has momentum working in its favor, with robust recent growth and margins, although there are certain risks that investors need to consider. However, for investors seeking less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative – having outperformed the S&P 500 and achieved returns surpassing 91% since its launch. How Does Robinhood Markets' Valuation Compare to The S&P 500? When assessing the price per dollar of sales or profit, HOOD stock appears costly relative to the broader market. • Robinhood Markets has a price-to-sales (P/S) ratio of 24.1 compared to a figure of 3.1 for the S&P 500 • Moreover, the company's price-to-free cash flow (P/FCF) ratio stands at 74.5, while for the S&P 500, it is 20.9 • Additionally, it has a price-to-earnings (P/E) ratio of 49.5 compared to the benchmark's 26.9 How Have Revenues for Robinhood Markets Changed in Recent Years? Robinhood Markets' Revenues have seen substantial growth over recent years. • Robinhood Markets has experienced its top line grow at an average rate of 30.0% over the last 3 years (compared to an increase of 5.5% for S&P 500) • Its revenues have grown 59.6% from $2.0 billion to $3.3 billion in the last 12 months (versus growth of 5.5% for S&P 500) • Furthermore, its quarterly revenues grew 50.0% to $927 million in the most recent quarter from $618 million a year ago (compared to a 4.8% increase for S&P 500) How Profitable Is Robinhood Markets? Robinhood Markets' profit margins are significantly higher than many companies in the Trefis coverage universe. • Robinhood Markets' Operating Income over the last four quarters amounted to $1.3 billion, reflecting a notably high Operating Margin of 39.0% • Over the most recent four-quarter period, Robinhood Markets' Net Income was $1.6 billion – signifying a notably high Net Income Margin of 48.8% (compared to 11.6% for S&P 500) How Resilient Is HOOD Stock During A Downturn? HOOD stock has underperformed compared to the benchmark S&P 500 index in several recent downturns. While investors are hopeful for a soft landing for the U.S. economy, what could the impacts be in the event of another recession? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes. • HOOD stock declined 90.2% from a high of $70.39 on August 4, 2021, to $6.89 on June 16, 2022, versus a peak-to-trough drop of 25.4% for the S&P 500 • The stock fully recouped to its pre-Crisis peak by June 3, 2025 • Since then, the stock has risen to a high of $97.98 on July 5, 2025 • HOOD stock dropped 75.7% from $70.39 on August 4, 2021, to $17.11 on December 29, 2021, against a peak-to-trough decline of 33.9% for the S&P 500 • The stock fully regained its pre-Crisis peak by June 3, 2025 Putting All The Pieces Together: What It Means For HOOD Stock In conclusion, Robinhood Markets' performance across the discussed parameters is summarized as follows: • Growth: Extremely Strong • Profitability: Extremely Strong • Financial Stability: Weak • Downturn Resilience: Weak • Overall: Strong While HOOD stock appears promising, investing in a single stock comes with risks. Conversely, the Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has demonstrated a history of comfortably outperforming the S&P 500 over the last four years. What accounts for this? In aggregate, HQ Portfolio stocks delivered better returns with reduced risk compared to the benchmark index; a smoother ride, as highlighted in HQ Portfolio performance metrics.
Yahoo
18-06-2025
- Business
- Yahoo
Coinbase Seeks SEC Approval to Offer Tokenized Stock Trading
Coinbase is seeking approval from the U.S. Securities and Exchange Commission (SEC) to launch tokenized stock trading, a move that could expand its business into the territory of traditional brokerage firms. The crypto exchange's chief legal officer, Paul Grewal, told Reuters that Coinbase aims to offer digital versions of stocks — known as tokenized equities — which would trade on blockchain networks rather than through conventional exchanges. The model could allow round-the-clock trading, reduce transaction costs and eliminate clearing intermediaries. However, the road ahead depends on how the SEC responds. Coinbase is looking to secure either a no-action letter or an exemption from enforcement, both of which would provide regulatory cover for offering these products in the U.S. The push marks a strategic shift for Coinbase, which already owns a broker-dealer license through a dormant affiliate. If the initiative succeeds, it could position the company alongside retail brokerages like Robinhood (HOOD) and Charles Schwab (SCHW), which cater to a similar investor base, as well as crypto exchange Kraken. Tokenized equities aren't yet legal to trade in the U.S., but platforms like Kraken are piloting such offerings overseas. Coinbase's timing aligns with a friendlier regulatory climate under new SEC chair Paul Atkins; the agency has dropped several crypto-related lawsuits and set up a task force dedicated to digital assets. Still, Grewal declined to say whether Coinbase had formally filed its request. The confidence that comes from clear SEC guidance has been missing, he said. 'Exciting? Yes. Important? Absolutely. But breaking news? Not exactly. We've been saying since earlier this year that the SEC should enable markets to unlock tokenized securities,' Grewal posted on social media. 'Tokenized debt, equity, and investment funds present an opportunity for tailored regulation for securities that are offered and traded via digitally native methods.' Sign in to access your portfolio
