CALIFORNIA: Robinhood Markets Inc is joining the growing push to trade US equities on the blockchain, making tokenised US securities available to 150,000 customers in 30 countries, 24 hours a day, five days a week.
The company will own the shares backing the tokens, a spokesperson said, and while token holders will have most of the benefits of the underlying security, including dividends, voting rights won’t be initially supported.
Bloomberg News previously reported that the product was in development.
“The time is now for crypto to move beyond bitcoin and memecoins and introduce fundamental utility,” Robinhood chief executive officer Vlad Tenev said Monday in a Bloomberg Television interview.
“We think in the future crypto and traditional financial services will fully merge, and crypto will become the infrastructure layer behind all kinds of financial services, from payments, which you’re starting to see with stablecoins, to holding deposits.”
Tokenised securities – blockchain-traded assets whose value mirrors the underlying equity – are gaining popularity with international investors eager to participate in the growth of the US stock market.
Robinhood shares surged almost 13% in New York trading to an all-time high.
Exchange-traded shares are available to investors in most parts of Europe, but advocates for the tokenised versions say they confer the benefits of equities, including dividends and stock splits, with more transparency and less friction because trades clear instantly.
For Menlo Park, California-based Robinhood, the new equity tokens mark a significant expansion in the European Union. Until now, the firm’s customers there have had access only to cryptocurrency trading.
It also gives the brokerage an opportunity to experiment with the products, which are in a regulatory limbo in the United States and not widely available.
It’s a way for Robinhood and others to potentially minimise costs associated with traditional market infrastructure because the trading occurs on a transparent blockchain platform rather than on an exchange.
Tenev, speaking at an event unveiling the product updates held at the Cannes, France chateau where Alfred Hitchcock’s To Catch a Thief was filmed, said that crypto is more than a speculative asset.
“The United States, after years of attempting to obliterate the crypto industry, is finally ready to catch up to the rest of the world,” Tenev said.
“It has the potential to become the backbone of the global financial system.”
In his Bloomberg Television interview, Tenev reiterated his confidence in the future of US crypto.
“We actually believe that there doesn’t need to be additional legislation.
The Securities and Exchange Commission has the mandate – the authority – to make the tokenisation of securities happen,” he said.
“And they’re keen to do it.”
Crypto exchange Kraken said it will soon offer tokenised securities to its international customers, and Galaxy Digital Holdings Ltd executives have conferred with US regulators to tokenise the firm’s own shares as well as those of other companies.
Finance stalwarts including BlackRock Inc, Franklin Templeton and Apollo Global Management Inc have also launched tokenised funds in recent years.
Robinhood’s tokenised equities will be issued on Arbitrum, a blockchain that is overlaid on ethereum, until the firm rolls out its own Robinhood Layer 2 blockchain, based on Arbitrum.
Robinhood recently completed its acquisition of Bitstamp Ltd, a cryptocurrency exchange in Europe.
Robinhood will also roll out perpetual futures for cryptocurrencies in Europe by the end of the summer, according to the statement.
The derivative allows investors to predict an asset’s price without establishing a termination date for the speculation. — Bloomberg
