[NEW YORK] Robinhood Markets is developing a blockchain-based platform that will allow retail investors in Europe to trade US securities such as stocks, according to two sources familiar with the matter.
The venture will be likely launched through a partnership with a digital asset firm, according to the sources. Arbitrum, a blockchain that is overlaid on Ethereum, and Solana, another popular blockchain, have both been under consideration for the partnership, they said. Discussions are still ongoing and an agreement has not yet been finalised, one source with direct knowledge said.
A spokesperson for Menlo Park, California-based Robinhood declined to comment. Offchain Labs, the developer of Arbitrum blockchain, and Solana Foundation, the non-profit behind Solana blockchain, both did not respond to requests for comment.
The push to offer tokens that represent financial instruments has increased in popularity as global institutions see the opportunity for cutting the costs associated with traditional trading infrastructure, as well as the benefits of increased transparency and standardisation.
A Global Financial Markets Association report found that distributed ledger technology could unlock around US$20 billion annually in global clearing and settlement costs. Crypto exchange Coinbase Global recently expressed interest in offering tokenised securities.
Robinhood, whose customers in the European Union only have access to trading cryptocurrencies, secured a brokerage license in Lithuania last month, allowing it to offer investment services such as stock trading in the bloc. The company also signed a deal to acquire crypto exchange Bitstamp in June last year, which when closed, would allow Robinhood to offer crypto-linked derivatives using Bitstamp’s MiFID multilateral trading facility license.
Robinhood chief executive officer Vlad Tenev said in a podcast in March that the firm was eyeing tokenizing securities, noting it would be part of a broader push to integrate digital assets into the financial system.
“I think tokenised securities can really push forward US company dominance in the global market,” Tenev said in the podcast. “Right now, it’s very difficult to invest in a US company if you are overseas.”
Robinhood is not alone in pursuing the benefits of tokenised assets. BlackRock, Franklin Templeton and Apollo all have launched their tokenised funds in recent years. BlackRock’s USD Institutional Digital Liquidity Fund, or BUIDL, has attracted more than US$2 billion since its launch last year. BLOOMBERG
