Robinhood introduced tokenized versions of private companies' stocks, sparking questions among experts and users.
Robinhood's Tokenized Stocks and Their Features
Robinhood launched tokenized versions of stocks from companies like SpaceX and OpenAI. These tokens, built on blockchain technology using the Arbitrum network, were presented by CEO Vlad Tenev. However, being merely a simulation of stocks, they do not provide ownership rights or stake in the companies.
Legal and Financial Risks for Investors
According to David Schwartz, CTO of Ripple, these digital assets are synthetic and do not grant any legal interest in the companies. He emphasized that users are not buying real shares, but merely promising to act like shareholders. Schwartz also pointed out that without proper measures from Robinhood, users may face legal consequences, adding further uncertainty to the new system.
State of the Tokenized Stock Market
While Robinhood's public stock tokens may reflect dividends, the absence of financial rights for private companies like OpenAI and SpaceX raises questions about their value. Investors face valuation issues as such tokens lack a pegged price in a public market, increasing the risk of loss. Some private companies have expressed interest in tokenizing their own stocks similarly, despite warnings.
Robinhood's tokenized stock model has sparked serious criticism. Warnings about the lack of ownership rights and legal accountability heighten concerns regarding investor protection.
