tl;dr
Robinhood CEO Vladimir Tenev announced plans to list thousands of private companies as tokenized stocks on the platform using an Ethereum layer-2 network, aiming to give retail investors access to private equities typically limited to insiders. This follows controversy over tokenized shares of OpenA...
Vladimir Tenev, co-founder and CEO of Robinhood, has revealed the platform’s plan to list “thousands” of private companies as tokenized stocks. This initiative aims to address the challenge that private companies are not publicly traded and usually limit investment to founders, venture capitalists, private equity firms, angel investors, and employees. By offering tokenized stocks through its Ethereum layer-2 network, Robinhood intends to give retail traders access to these private equities, currently only available in the EU.
The announcement came amid controversy surrounding Robinhood’s tokenized stock offerings for private firms OpenAI and SpaceX. Notably, OpenAI publicly disavowed the tokenized shares, stating they did not partner with Robinhood nor approve any transfer of equity. Despite this, Tenev noted that these tokenized stocks were distributed via giveaways and are not yet tradable.
Tenev expressed enthusiasm about the potential for private companies to join the platform, saying many firms have reached out expressing interest in having their shares tokenized for retail access. For Robinhood to facilitate tokenized stocks, it must either hold the underlying assets or collaborate with a traditional financial business that does. Tokenized stock trading for private company shares, which often occur on secondary markets among institutional investors, implies that Robinhood either holds such equities or has partnerships with equity holders, despite public disputes.
Market predictors, like those on Myriad Markets, estimate a 51.6% chance that Robinhood will introduce at least one additional private company as a stock token by the end of the month. This move could signal a significant shift in how retail investors access private company equity, potentially opening a new frontier in investment opportunities.