Tokenized Stocks Are Back from the Dead, Thanks to Robinhood

Robinhood (HOOD) recently rolled out tokenized stocks on the Arbitrum (ARB-USD) network for EU customers. This means users can now trade stock tokens using Robinhood’s interface without handling wallets or seed phrases. Co‑founder Vlad Tenev described it as a preview of what a blockchain‑native version of Robinhood could look like.

Several other firms followed suit quickly. Gemini added tokenized equities to Arbitrum, and 60 token classes launched on Solana (SOL-USD) via Backed’s xStocks with backing from Kraken, Bybit, Bitrue, and Gate.io. These moves show that tokenized stocks are gaining real traction.

Critics Question Whether They Offer Real Ownership

Many experts say tokenized stocks do not grant true ownership. They argue that these tokens only promise a claim on a real share held by a custodian. In Robinhood’s case, its tokenized stocks fall under EU derivative rules, even though they are backed by actual shares held by licensed broker‑dealers. Tenev admits they are technically derivatives “backed by the real share.”

Kraken’s xStocks follow a similar structure, with shares held in a Liechtenstein Special Purpose Vehicle. Holders can redeem tokens for the actual share value when markets open. This setup is a big step—but it still lacks official legal recognition that token holders truly own the shares. Experts stress that new legal frameworks will be needed before on‑chain transactions can transfer ownership automatically.

Robinhood Pushes Into Legal Gray Areas

You could say Robinhood is operating like a crypto version of early Uber (UBER). They launched in the EU, but regulators in the US could still intervene. The Securities Industry and Financial Markets Association has urged caution, asking the SEC to reject models that don’t fit traditional equity rules. Yet SEC Chair Paul Atkins recently said tokenization is an innovation worth exploring.

Legal experts have raised red flags though. OpenAI flagged issues when Robinhood tokenized its private shares without transfer approval. In fact, Lithuania opened an investigation. Some private companies may even cancel token deals if they violate shareholder agreements. On the flip side, some private firms are actively asking Robinhood when they can tokenize their own shares.

Tokenization Enables 24/7 Trading and DeFi Use

One clear benefit is round‑the‑clock trading. Traditional markets are closed 81% of the time. Tokenized stocks on xStocks and Robinhood currently trade 24/5, but plans are in motion to add true 24/7 access via Bitstamp and integrated DeFi tools. Traders could soon borrow, lend, and swap stock tokens away from any brokerage.

This trend could disrupt traditional exchanges. If more broker‑dealers adopt tokenized equities on blockchain, they could challenge the dominance of NYSE and others. But this vision depends on developing legal clarity, good infrastructure, and institutional trust.

There Are After-Hours Risks to Consider

Trading stocks after hours comes with risks. If someone buys stock tokens when markets are closed, the custodian must execute the equivalent trade when markets open. The result can be price slippage or wider spreads. Retail traders could feel the burn if opening prices mismatch their expectations.

Plus, having multiple token issuers for the same stock could fragment liquidity. Imagine choosing between rTSLA, cTSLA, sTSLA, and more. That confusion could water down market depth and increase counterparty risk, especially if one provider collapses.

Remember the Last Cycle Failure

Tokenized stock models already failed once in 2021. Projects like Synthetix saw little uptake and faded quickly. Binance and Mirror pulled their versions after regulatory pressure. Even FTX’s tokenized ETFs collapsed post‑FTX breakdown. Only Securitize has survived—its Exodus token remains the market leader by a wide margin.

Are Tokenized Stocks Ready for the Big Leagues?

Tokenized stocks have some real advantages. People around the world can access them more easily, they can trade at any time, and they can be used in things like DeFi for lending or borrowing.

But there are real concerns too. Right now, investors who buy these tokens don’t get voting rights or legal protections like regular shareholders. The legal rules around how these tokens work are still unclear. Liquidity is also spread out across many different platforms, which can make it harder to buy or sell smoothly. And trading when the main stock market is closed can come with added risks.

If tokenized stocks are going to truly take off, the industry will need to fix these issues. That means building a legal framework that gives buyers actual ownership, making sure the assets are stored safely, creating a single standard for how tokenized stocks work, and getting full support from regulators.

It will take time. But if they can solve these problems, tokenized stocks could seriously change how people invest.

Is Robinhood Stock a Good Buy?

Wall Street is cautiously optimistic about Robinhood, but not exactly bullish. Out of 20 analysts who’ve rated the stock in the past three months, 14 say Buy, five say Hold, and one says Sell, enough to give it a “Moderate Buy” consensus.

Still, the numbers don’t paint a perfect picture. The average HOOD price target is $88.37, which actually implies a 13.1% drop from its current price of $101.69.

See more HOOD analyst ratings