Financial Innovation or Gimmick? Robinhood's Tokenized Stock Product Faces European Regulatory Storm

Can tokenized stocks disrupt traditional stock trading? Recently, Robinhood's equity token product trial in Europe has crossed regulatory red lines, and investors need to exercise caution.

Recently, the tokenized stock trading business launched by the American online brokerage Robinhood in Europe has attracted widespread attention—not only because it is open to European retail users for the first time but also because it boldly includes "equity tokens" of unlisted companies such as OpenAI and SpaceX.

However, this innovation quickly encountered regulatory resistance and corporate skepticism, sparking a storm of controversy over "securities tokenization." According to reports, the Bank of Lithuania has launched an investigation into Robinhood's stock token product, requiring the company to provide relevant explanations.

At the same time, OpenAI publicly warned investors that the tokens offered by Robinhood do not represent company equity and that the company has not approved any equity transfers.

What are Robinhood's tokenized stocks?

Robinhood's new product allows its European users to trade tokens linked to U.S. stocks through blockchain technology, with over 150,000 users across 30 countries in the EU.

These tokens are not cryptocurrencies themselves but digital assets anchored to real equity, theoretically granting holders partial rights related to the stocks, such as dividends and stock splits as "economic benefits," but typically excluding governance rights such as voting.

Robinhood is not alone in this. Institutions like Kraken and Galaxy Digital are also developing tokenized securities products, while traditional giants like BlackRock, Franklin Templeton, and Apollo have already launched tokenized funds. Global capital markets are rapidly warming up to the interest in "asset tokenization."

Robinhood's tokenized stocks will operate on the Arbitrum blockchain, with plans to launch its own Layer 2 solution in the future to further reduce transaction costs and improve efficiency. Robinhood also plans to launch perpetual contract products for cryptocurrencies by the end of summer, further intensifying its focus on crypto assets.

OpenAI's doubts raise market concerns

More notably, Robinhood also gifted tokens representing unlisted companies OpenAI and SpaceX, provoking a strong reaction from OpenAI.

On July 3rd local time, OpenAI issued a statement on the social media platform X, clearly stating that the tokens provided by Robinhood do not represent company equity and that the company neither participated in nor endorsed this product. "Any transfer of OpenAI equity requires our approval—we have not approved any transfers," the company warned.

The product logic of innovation and chaos

This statement directly led to a sharp decline in Robinhood's stock price, triggering widespread discussions about the safety of tokenized stocks and what they actually represent Despite the advantages of tokenized stocks, such as the transparency and instant settlement brought by blockchain, there are many complexities in practice, especially for non-public companies. Due to the lack of a public market pricing mechanism for these companies, coupled with transfer restrictions often imposed on original shareholders, the question of what rights the "tokens" actually represent becomes a core issue.

Robinhood CEO Vlad Tenev stated that although tokens are not technically equity, "these tokens effectively provide retail investors with access to these private assets."

Campbell Harvey, a professor at Duke University's business school focusing on decentralized finance, believes that these tools are essentially direct derivatives, and OpenAI's opposition may stem from a misunderstanding of the product. However, Ian D'Souza, a professor at NYU Stern School of Business, warned that the "cross-integration" of traditional financial markets and blockchain products could become very chaotic.

Facing a Regulatory Storm in Europe

Robinhood's tokenized product is initially being tested in the European market, partly due to the ambiguous regulation of such products in the United States. Tenev believes that the U.S. Securities and Exchange Commission (SEC) "does not need new legislation and has the authority to promote the tokenization process," and expressed hope to promote the product in the U.S. and the U.K. in the future.

The Bank of Lithuania has contacted Robinhood regarding its private stock token product, requesting clarification on the information provided to customers. A spokesperson for the central bank stated, "We are currently waiting for an explanation and will evaluate it."

Tenev acknowledged in a media interview that regulators have indeed raised questions, but he expressed confidence in the product's compliance, believing it "can withstand the most rigorous scrutiny."

It is worth noting that these tokens for unlisted companies are currently not tradable. Robinhood holds the relevant rights through a special purpose vehicle (SPV) it has established and prices them using an internal valuation model