Robinhood is reshaping the global trading landscape, and tokenized stocks have entered an era of dimensionality reduction.

Push altcoins into winter: Only coins that pass ETF or link to TradFi have a chance of not being eliminated.

Written by: CryptoLeo, Odaily Star Daily

In the early hours of today Beijing time, Robinhood released several “heavyweight bombs,” announcing the launch of stock tokenization, RWA L2, perpetual contract features, and staking services.

The weak interaction and poor liquidity between TradFi and crypto have always been a “heart knot” for crypto practitioners. At the beginning of 2024, the situation began to improve, as the approval of the BTC spot ETF facilitated traditional funds’ engagement with crypto, and subsequently, other relatively mainstream crypto assets also followed suit in ETF approvals; by this year, the “GENIUS Act” ignited the “compliance bull” from the perspective of stablecoins, and traditional finance stepped in again. However, in my opinion, this is still not enough, as the most important link—stock tokenization—has yet to fully unleash its potential.

Currently, among the institutions laying out stock tokenization, three are relatively compliant and well-known: first is Kraken, which has already launched its stock tokenization platform xStocks last month, now supporting 60 U.S. stocks for trading around the clock; second is Coinbase, which is seeking SEC approval to issue blockchain-based stocks in the U.S., and if approved, will allow Coinbase to offer traditional stock trading on the blockchain; and third is today’s main character, Robinhood, which announced its L2 (based on Arbitrum Orbit) and stock tokenization while also launching several new products, including perpetual futures for EU customers and staking for U.S. users. Additionally, Robinhood will gift OpenAI and SpaceX stock tokens to EU users.

As a result of this news, Robinhood stock HOOD rose over 12 points to $93.15 (at the time of writing).

Three Major Moves - Robinhood’s Forecast is Set

As early as May this year, Robinhood submitted a proposal to the SEC aimed at tokenizing the U.S. securities market. The proposal indicates that the scope of tokenization may include traditional assets such as bonds and stocks.

Early yesterday morning, Robinhood co-founder Vlad Tenev posted on X that Robinhood will release an important announcement related to its crypto business one day later, revealing “exciting” news from Robinhood Crypto. In the hours leading up to the official issuance of tokenized stocks, there were also rumors in the market that “Robinhood EU may launch tokenized stock trading services.”

Below, Odaily Planet Daily will specifically introduce the three major announcements made by Robinhood today:

stock tokenization and its L2

According to its official website, Robinhood users can purchase over 200 types of US stock tokens on its app, including tokenized stocks like NVIDIA, Microsoft, and Apple. Specifically:

• Stock tokens are displayed and traded in USD. When users place an order, Robinhood will automatically convert it to EUR based on the current exchange rate and charge a small foreign exchange fee of 0.1%. Additionally, there are no hidden fees;
• Extremely low trading volume threshold: you can start trading with as little as 1 euro;
• Trading hours are almost available 24/7: from Monday to Friday, tokens can be bought and sold 24 hours a day.

Robinhood has also launched a related campaign, whereby eligible EU users can receive free SpaceX and OpenAI stock tokens worth 5 euros through Robinhood EU until July 7. Robinhood is rewarding a total of 500,000 dollars in SpaceX tokens and 1 million dollars in OpenAI stock tokens for this campaign.

It should be noted that after tokenization, the stock code of the stock is not the same as the token name (for example, Facebook’s stock code changed from FB to META). The stock token will also change in accordance with the actions of its company, such as a stock split (1 share becomes 2 shares), and the token on Robinhood will change accordingly (1 token becomes 2 tokens), and vice versa.

During his speech at Cannes (where ETHCC was recently held), CEO Vladimir Tenev explained the three stages of stock tokenization:

• Phase One: Tokenize stocks into receipt tokens, with transactions still settled in the existing TradFi market;
• Phase Two: Integrate Bitstamp to enhance liquidity and enable 24/7 trading;
• Phase Three: Integrate blockchain to achieve composability advantages.

Stock tokenization will initially be issued on Arbitrum. In the future, it will be traded on the Robinhood L2 chain based on Arbitrum Orbit, which is currently under development. The Robinhood Chain will be optimized for stock tokenization and will support 24/7 trading, seamless bridging, and self-custody.

European Users Perpetual Futures

In addition to tokenized stocks, Robinhood today also announced the launch of perpetual futures for European users, set to be released later this summer. Users can open long/short contracts with up to 3x leverage, with more options to be expanded for premium customers in the future. Furthermore, to help users simplify the complex process of trading perpetual contracts, Robinhood has built an intuitive interface that allows users to set position sizes and manage margins easily, with orders routed through the Bitstamp perpetual contract exchange.

cryptocurrency staking and a series of promotional packages

• Launching cryptocurrency staking services for eligible users in the U.S., the first to open are ETH and SOL. Additionally, Robinhood has set no limit on the amount for user staking and has introduced a deposit promotion, where within a limited time (after July 7), users in the U.S. and Europe can deposit cryptocurrency into Robinhood and receive a 1% deposit reward—if total deposits reach the goal of $500 million, there is a chance to double it to 2%. Users who deposit before July 7 will directly receive a 2% reward;
• Cryptocurrency credit card rewards: The Robinhood Gold Card offers cash back on spending across all categories for customers in the US. Until this fall, customers can use these rewards to automatically purchase cryptocurrency;
• Cortex for Crypto (AI Investment Platform): Launching later this year, Robinhood Gold members will be able to directly view insights, trends, and event-based market analysis on each token’s detail page. This product is designed to help customers quickly understand price and market changes in real-time.
• Smart Exchange Routing: Evaluate multiple partner exchanges and route user orders to obtain the best prices. The larger the user’s trading volume in the past 30 days, the lower the fee rate will be. API support will be launched soon.
• Tax Lot: U.S. customers can now view and sell specific tax lots for cryptocurrency transactions, allowing users to strategically choose which lot to sell;
• Advanced Charts: The advanced charts of the Robinhood Legend app will be launched on mobile and will expand to cryptocurrencies in August.

Today, as listed companies announce new actions regarding crypto reserves every week, the series of services and suites launched by Robinhood are in a better position than ever before. Its CEO Vladimir Tenev said in a speech: “We have the opportunity to prove to the world what we have always believed, that cryptocurrency is far more than a speculative asset. It has the potential to become a backbone of the global financial world.”

In the past few years, Robinhood has undergone many industry ups and downs, transitioning from a retail brokerage to a cryptocurrency star. Looking back now, everything mentioned above is traceable.

In the past 7 years, Robinhood’s efforts in crypto

On the timeline, counting Robinhood’s actions in crypto starts from 2018. In February of that year, Robinhood took its “first step” into crypto by announcing that it would allow users to trade BTC and ETH on its platform, initially launched in some U.S. states and gradually expanding to more cryptocurrencies and more regions. Since then, Robinhood has temporarily paused crypto trading multiple times due to extreme volatility in cryptocurrency prices and other issues, and has also faced scrutiny and fines from the SEC. Fortunately, Robinhood has never stopped exploring its crypto business:

Timeline of crypto-related companies acquired by Robinhood

Since 2021, Robinhood has started acquiring crypto and crypto-related companies, including:

• In 2021, Robinhood acquired the cross-exchange trading platform Cove Markets, marking Robinhood’s first crypto acquisition aimed at strengthening Robinhood’s core crypto trading products. Since Cove Markets allows customers to manage accounts across multiple exchange platforms and aggregate large amounts of data, this acquisition aims to facilitate Robinhood customers in managing their crypto accounts more easily.
• In 2022, Robinhood announced the acquisition of the UK crypto platform Ziglu, which allows retail investors to purchase cryptocurrencies and has obtained the Electronic Money Institution (EMI) license from the UK’s Financial Conduct Authority (FCA). “Ziglu’s European compliance and large user base in Europe” was also an effort by Robinhood to expand its business (however, due to the severe downturn in the crypto market at the end of the year, Robinhood lowered its acquisition offer for Ziglu, and the acquisition was ultimately not completed);
• In May this year, Robinhood announced the acquisition of the Canadian crypto platform WonderFi, which has two regulated trading platforms, Bitbuy and Coinsquare. Analysts have stated that this acquisition is “a key first step for Robinhood to enter the Canadian market,” and it is expected that the deal could bring Robinhood “approximately $250 million in annual revenue,” or “close to 10% growth potential.”
• In June this year, Robinhood agreed to acquire Bitstamp for $200 million, with the transaction expected to be completed in the first half of 2025. In addition to adding 4 to 5 million new cryptocurrency customers for Robinhood, another important reason for the acquisition is to allow it to take over the more than 50 licenses that Bitstamp holds in Europe and globally, which also lays the foundation for its announcement today regarding the launch of crypto perpetual contracts in Europe;
• Today, Robinhood acquired the AI investment advice platform Pluto, which is known for its AI-driven personalized investment suggestions and real-time analysis, providing its users with tailored investment strategies and insights. The acquisition of Pluto also precedes its announcement of the AI assistant Robinhood Cortex, which will not only formulate strategies for stocks and ETFs but will also cover news related to the crypto market and updates on token prices. Cortex will provide all recent relevant developments on the detailed information page when users click on a token, allowing for a better understanding of the reasons behind token fluctuations.

The development history of Robinhood’s crypto products

While Robinhood is making acquisitions, it is also working to improve its product offerings:

As mentioned earlier, during the initial promotion of its cryptocurrency business, it stopped instant deposits for crypto trading due to the large fluctuations of BTC and DOGE, which was the first hurdle for it to transition as a broker to accept crypto trading. Since then, Robinhood has undergone multiple investigations and fines from regulatory authorities.

Robinhood CEO Vladimir Tenev stated during a roadshow in 2021 that the company would fully commit to crypto, focusing on expanding its crypto products, and users can expect new crypto features “at some point.” This also marked the beginning of Robinhood’s push for its crypto products.

Tenev did not break his promise, and when DOGE was trending, Robinhood took the opportunity to test and launch the DOGE transfer function, allowing DOGE to be transferred to external wallets. At the same time, they also launched cryptocurrency gift cards.

After the rise of DeFi, NFTs, and other developments, Robinhood announced the launch of a new Web3 wallet application, Robinhood Wallet (currently supporting dApps on the Ethereum, Polygon, Arbitrum, Optimism, and Base networks), allowing users to access NFT markets, DeFi, DEX, and token swap functionalities, similar to other non-custodial wallets like MetaMask, but it is an application independent of existing stock and crypto platforms. After its launch, Robinhood Wallet is also expanding its supported chains, tokens, and iOS version. (Last year, there was a period when the tokens transferred out by Robinhood could be used as a reference for short-term price increases.)

By the end of 2024, Robinhood released its crypto data, with the value of managed crypto assets reaching $38 billion as of November 2024. By November 2024, Robinhood’s nominal trading volume for cryptocurrencies reached $119 billion (over the past year). In 2024, its product updates include:

• Achieved comprehensive coverage of all 50 states and regions in the United States, and supports new coins, including SOL, PEPE, ADA, XRP, and WIF, bringing the total number of cryptocurrencies available to US users to 20.
• Launched the Robinhood cryptocurrency trading API, providing tools for viewing cryptocurrency market data, managing portfolios, and placing orders programmatically. Advanced order types, including stop-loss and limit orders, are also available on iOS and Android systems.
• At the end of the year, it announced the launch of ETH and SOL staking for European customers. Since its launch in the second quarter, over two-thirds of the SOL held in the region has been staked.
• Its wallet Robinhood Wallet not only supports Ethereum and Polygon but also adds Swap functionality for Solana, Base, Arbitrum, and Optimism. It has also launched cross-chain and zero Gas exchanges on Ethereum and some of its L2s (as mentioned earlier).

At this point, Robinhood’s complete set of cryptocurrency facilities has gradually improved, covering spot trading, contracts, staking, AI, and its own stock tokenized public chain. Back then, Robinhood could never have imagined that the “first step” of opening up cryptocurrency trading would have such a huge impact, and now its products are close to becoming a “unicorn” in the crypto industry.

“Seven years ago in spring, Robinhood picked up a real gun and pulled the trigger, but it had no impact at the time. Until today, Robinhood turned around and found that the bullet hit the tokenized stock market.”

Impact of Force: The Spring of the Stock Market, the Doom of Altcoins?

At present, Robinhood excels in certain aspects of cryptocurrency compared to many other platforms, such as unlimited ETH staking. In keeping with its consistently retail-friendly approach, it may also be more lenient in trading restrictions on certain coins than others. However, the variety of tokens currently supported is limited, and altcoins that have not yet launched might need to consider how to get onto Robinhood; for the stock market, the launch of SpaceX and OpenAI stock tokens in Europe marks the democratization of private equity, allowing retail investors to access stocks that were previously unreachable.

Although tokenized stocks are not a new idea, many crypto trading platforms have such products, and there are quite a few crypto platforms specializing in this direction, but Robinhood’s entry has a different significance.

The significance of crypto platforms creating tokenized stock products lies in providing native users in the coin circle with convenient opportunities to trade other stock assets. For compliant brokerage platforms, “link” and “coin” represent a solution for them to achieve more efficient settlement, better liquidity, lower trading friction, and connect cross-regional and cross-timezone trading scenarios and users. In simple terms, it allows all ordinary investors to smoothly enter the market. In the future, for the same stock, will you look at Nasdaq or Robinhood in the pre-market?

The practitioners in the narrow sense of the “coin circle” actually have little to be happy about. The liquidity of altcoins will be further squeezed, and the “incremental flow” will increasingly have no necessity to enter the coin market. In the future, apart from the “coins that have passed the ETF” and “coins that can link with TradFi and provide underlying infrastructure,” other altcoins may find it difficult to escape the fate of extinction.

Although Robinhood is a relatively young “alternative” brokerage and has a gap in scale compared to large traditional brokerages, and has been criticized for multiple operational issues, its recent “move” will certainly trigger further thinking and planning from the traditional giants who are already eager to compete.

Many product forms are not new; who does it is the key to life and death.