by Emily Nicolle, Francine Lacqua and Paige Smith
Robinhood Markets Inc. Chief Executive Officer Vlad Tenev said the firm is in talks with regulators over its offering of tokenized equities in Europe, after the launch drew rebuke from companies including OpenAI.
The Menlo Park, California-based firm announced last week that retail investors using its app in the European Union could start trading tokens that represent shares of US equities on blockchain. The launch included a giveaway of tokens for closely held companies like OpenAI. The firm led by Sam Altman later cautioned traders that the “tokens” are not equity in the company.
“They have some questions,” said Tenev in an interview with Bloomberg Television, referring to the Bank of Lithuania, which oversees Robinhood’s activities in the EU. “They want to make sure that everything is proper because it’s a new innovative offering. We’re confident. We think that these are not only important, but they’ll withstand the highest form of scrutiny.”
The Bank of Lithuania told CNBC on Monday that it had sought clarification from Robinhood around the structure of the tokens. The central bank didn’t respond to requests for comment on the inquiries.
The tokens representing private stocks like OpenAI and SpaceX are not yet tradeable, Tenev said. Since the companies aren’t publicly traded, Robinhood values the businesses using its own internal methodology, according to a legal notice regarding the promotion.
The company hopes to be able to launch tokenized equities in other markets like the US and the UK in due course and pending regulatory approval, Tenev said.
“For tokenization in the US, we do believe that the SEC has the authority to make it happen without legislation,” he added. “The US shouldn’t be far behind.”
Tokenized securities — blockchain-traded assets whose value mirrors the underlying equity — are gaining popularity with international investors eager to participate in the growth of the US stock market. While exchange-traded shares are available to investors in most parts of Europe, advocates for the tokenized versions say they confer the benefits of equities, including dividends and stock splits, with more transparency and less friction, because trades clear instantly.
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