Robinhood Markets Inc. is developing a blockchain platform that would allow European investors to trade tokenized U.S. stocks.
The global interest in tokenized assets is on the rise, and among other companies, Robinhood is buying into the wave with its plan to launch a blockchain-based platform that allows its customers to trade tokenized assets.
Robinhood to launch a blockchain platform
Robinhood Markets Inc. is currently working to claim its stake in global finance by developing a blockchain-based platform that will allow European retail investors to trade U.S. securities.
According to individuals familiar with the matter, Robinhood, based in Menlo Park, California, is currently in talks to build the platform in partnership with a digital asset company.
Two blockchains under consideration for the collaboration are Arbitrum and Solana. Arbitrum operates as a layer-2 solution on the Ethereum network, and Solana is known for its fast transaction speeds and low costs.
Discussions are still ongoing, and no official agreement has been reached. A spokesperson for Robinhood declined to comment on the ongoing discussions, and Offchain Labs, the developer behind Arbitrum and the Solana Foundation, both followed suit and refrained from responding to media inquiries.
Robinhood’s proposed platform would tokenize U.S. stocks and potentially other securities, while giving investors in the European Union access to trade them 24/7 with increased efficiency and lower settlement costs.
At present, Robinhood’s customers within the European Union only have access to cryptocurrency trading. However, the company recently secured a brokerage license in Lithuania, which allows it to offer traditional stock trading services across the EU. This development is expected to pave the way for the blockchain venture.
Tokenized securities
Tokenized securities are digital representations of traditional financial assets like stocks, bonds, or real estate that are recorded on blockchain networks. The technology offers greater efficiency, faster settlement times, and significantly lower infrastructure costs.
A 2023 report by the Global Financial Markets Association (GFMA) showed that distributed ledger technology (DLT) could cut global clearing and settlement costs by up to $20B annually. These saved expenses come from reducing the reliance on centralized agents and complex reconciliation processes, which often delay trading.
Several major financial institutions are buying into the tokenization wave. BlackRock’s USD Institutional Digital Liquidity Fund, known as BUIDL, has attracted over $2B in assets since its launch.
Franklin Templeton and Apollo have each launched their own tokenized investment products in recent years. Even Coinbase has expressed interest in offering tokenized securities.
The CEO of Robinhood, Vlad Tenev, publicly shared his enthusiasm for the potential of tokenized assets. Speaking on a podcast in March, he said, “Tokenized securities can really push forward U.S. company dominance in the global market. Right now, it’s very difficult to invest in a U.S. company if you’re overseas.”
This challenge is precisely what Robinhood’s blockchain platform seeks to solve as European investors face regulatory and operational hurdles when they try to invest directly in U.S.-listed securities.
Robinhood’s acquisition of Bitstamp, a well-established European cryptocurrency exchange, is also critical to its expansion into the EU. Bitstamp’s MiFID-compliant multilateral trading facility (MTF) license would allow Robinhood to offer crypto-linked derivatives and potentially even tokenized securities. Once the deal closes, Robinhood could use Bitstamp’s infrastructure and licensing to bring its tokenized platform to the European market faster and more securely.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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