Ignoring OpenAI's reprimand of Robinhood (HOOD.US) in talks with European regulators to tokenize stocks

The Zhitong Finance App learned that Robinhood (HOOD.US) CEO Vlad Tenev said that the company is in discussions with regulators regarding its issuance of tokenized shares in Europe, after the product triggered criticism from companies including OpenAI.

Menlo Park, California-based Robinhood announced last week that retail investors using its app in the European Union can begin trading tokens representing US stocks on the blockchain. The launch included giving away tokens from some unlisted companies, such as OpenAI. OpenAI, led by Sam Altman, then reminded traders that these “tokens” were not shares in the company.

“They have some questions,” Tenev said in an interview. He was referring to the Central Bank of Lithuania, which is responsible for overseeing Robinhood's business in the EU. Tenev said, “They wanted to make sure everything was in compliance because it's a new innovative business. We are very confident. We believe these businesses are not only important, but they can stand up to the strictest scrutiny.”

The Central Bank of Lithuania said on Monday that it had asked Robinhood for an explanation regarding the structure of the token.

Tenev said that tokens representing private stocks such as OpenAI and SpaceX have yet to be traded. According to the promotional campaign's legal statement, as these companies have not been publicly listed, Robinhood uses its internal methods to value these businesses.

Tenev said the company wants to launch tokenized shares to other markets such as the US and the UK after receiving regulatory approval.

He added, “Regarding the tokenization of the US, we do believe that the SEC has the power to proceed with this process on its own, without the need for legislation. America shouldn't be far behind.”

So-called tokenized securities refer to assets traded through blockchain and whose value is linked to the value of the underlying stock. This asset is being favored by international investors eager to participate in the growth of the US stock market. Although investors in most parts of Europe can buy shares traded on exchanges, advocates of tokenized securities say that these tokenized securities have many advantages of stocks, including dividends and stock splits, and are more transparent and operate more smoothly because transactions are settled instantly.

Before the US market on Tuesday, Robinhood rose nearly 1%. The stock has accumulated a 150% increase since this year.