Robinhood began offering iconic stocks in private companies, causing a backlash from Openai as one of its target companies.
At an event in Cannes on Monday, Robin Hood co-founder and CEO Vlad Tenev showed what he described as “stock tokens” for Openai and SpaceX. This move forms part of the European expansion of Robinhood. This includes offering EU users more than 200 tokenized US stocks.
TENEV told participants that European users downloading the Robinhood app have the opportunity to own tokenized stocks in Openai and Elon Musk’s Space Exploration Venture SpaceX.
The trading platform explains on its website: “Robin Hoodstock tokens follow the prices of publicly available stocks and ETFs. These are derivatives tracked on the blockchain and exposed to the US market. When you buy a stock token, you are not buying any actual stocks.
This distinction means that token holders do not enjoy traditional shareholder rights, such as voting privileges, despite financial exposure to the company.
Openai refuses to offer Robinhood’s tokenized shares
This announcement sparked a sharp responsibilities from Openai. The well-known AI company led by Sam Altman has firmly denied its involvement in Robinhood’s initiative.
“These ‘Openai tokens’ are not Openai equity,” the company said in a post on X.
Industry observers note that Robinhood’s approach appears to be designed to provide price exposure to the underlying stock rather than actual ownership, and may be constructed in this way to navigate complex regulatory requirements.
This mechanism is similar to products from other financial technology companies. For example, Cryptocurrency Platform Kraken offers a product called Xstocks. This does not represent direct share ownership, but is instead supported by the underlying stock.
The introduction of tokenized stocks like Openai represents Robinhood’s latest efforts to expand its footprint in Europe while expanding cryptocurrency and blockchain-based products. During the same announcement, the company has facilitated the launch of tokenized US stocks in Europe, along with permanent trading and staking capabilities for American users.
Impact on private market investments
Robinhood’s initiative, if successful despite the pushback, can usually democratize access to the required private companies to make stocks available to institutional investors, venture capitalists and accredited individual investors.
However, the debate highlights the challenge of bringing innovation to regulated financial markets, particularly when dealing with private companies that strictly control their equity.
Financial experts should note that potential investors need to understand the distinction between these tokenized derivatives and actual stock ownership. Value propositions and risks differ significantly from traditional equity ownership, even when exposed to previously inaccessible investment opportunities.
Robinhood’s broader European expansion continues Apace, and the company is keen to capitalize on growing interest among European traders in both American stocks and cryptocurrency investments. It remains to be seen whether the issue of tokenized stocks and subsequent rebound from companies like Openai will help or disrupt these ambitions.
reference: Floods interested in European AI GigaFactories Plans
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