Robinhood Defends Tokenized Stock Model Amidst Controversy

Robinhood Doubles Down on Tokenized Stocks

Robinhood is standing its ground on its controversial tokenized stock model, arguing it can bridge the wealth gap and open up private market opportunities to a wider audience. Johann Kerbrat, Robinhood's SVP and General Manager for Crypto, addressed concerns and outlined the company's broader vision at TOKEN2049 in Singapore.

Key Takeaways

• Robinhood believes tokenization can democratize access to private markets, leveling the playing field for everyday investors.
• Kerbrat emphasizes Robinhood's appeal to a broader demographic beyond just crypto enthusiasts.
• Crypto is a rapidly growing revenue stream for Robinhood.

Addressing the Critics

Robinhood's foray into tokenized stocks, including those tied to companies like OpenAI and SpaceX, hasn't been without its challenges. Offered to European users, these tokens are blockchain-tracked contracts that mirror the price of the underlying assets but don't confer traditional shareholder rights. OpenAI publicly distanced itself from the offering, raising questions about the initiative.

Kerbrat defended the approach, stating that it bypasses the limitations of private market access, which often excludes non-accredited investors. He criticized the current system where retail investors often serve as "exit liquidity" when companies finally go public.

One App to Rule Them All

Robinhood envisions itself as a comprehensive financial platform, not just a stock trading app. Crypto is a key component of this vision, with the addition of features like staking and perpetual contracts aimed at diversifying investment options.

Crypto Growth Engine

Crypto has become a significant driver of revenue for Robinhood, generating $160 million in the last quarter alone. Staking, in particular, is gaining traction, and the company is seeing strong interest in its newly launched perpetual contracts in Europe.

Navigating Regulatory Waters

Robinhood's prediction markets have faced regulatory scrutiny, with the New Jersey Department of Gaming Enforcement halting bets in the state. Kerbrat acknowledges the evolving regulatory landscape and sees investment lines blurring over time.