
'Please be careful.' There are risks and rewards as crypto heavyweights push tokenization
'Tokenization is going to open the door to a massive trading revolution,' said Vlad Tenev, the CEO of the trading platform Robinhood at a recent James Bond-themed tokenization launch event in the south of France.
Advocates say tokenization is the next leap forward in crypto and can help break down walls that have advantaged the wealthy and make trading cheaper, more transparent and more accessible for everyday investors.
But critics say tokenization threatens to undermine a century's worth of securities law and investor protections that have made the U.S. financial system the envy of the world. And Robinhood's push into tokenizing shares of private companies quickly faced pushback from one of the world's most popular startups.
What is tokenization?
The basic idea behind tokenization: Use blockchain technology that powers cryptocurrencies to create digital tokens as stand-ins for things like bonds, real estate or even fractional ownership of a piece of art and that can be traded like crypto by virtually anyone, anywhere at any time.
The massive growth of stablecoins, which are a type of cryptocurrency typically bought and sold for $1, has helped fuel the appetite to tokenize other financial assets, crypto venture capitalist Katie Haun said on a recent podcast.
She said tokenization will upend investing in ways similar to how streamers radically changed how people watch television.
'You used to have to sit there on a Thursday night and watch Seinfeld,' Haun said. 'You tune in at a specific time, you don't get to choose your program, you couldn't be watching a program like Squid Games from Korea. Netflix was market-expanding. In the same way, I think the tokenization of real-world assets will be market expanding.'
Growing momentum
Robinhood began offering tokenized stock trading of major U.S. public companies for its European customers earlier this month and gave away tokens to some customers meant to represent shares in OpenAI and SpaceX, two highly valued private companies.
Several other firms are diving in. Crypto exchange Kraken also allows customers outside the U.S. to trade tokenized stocks while Coinbase has petitioned regulators to open the market to its U.S. customers. Wall Street giants BlackRock and Franklin Templeton currently offer tokenized money market funds. McKinsey projects that tokenized assets could reach $2 trillion by 2030.
Crypto's golden age
The push for tokenization comes at a heady time in crypto, an industry that's seen enormous growth from the creation and early development of bitcoin more than 15 years ago by libertarian-leaning computer enthusiasts to a growing acceptance in mainstream finance.
The world's most popular cryptocurrency is now regularly setting all-time highs — more than $123,000 on Monday — while other forms of crypto like stablecoins are exploding in use and the Trump administration has pledged to usher in what's been called the 'golden age' for digital assets.
Lee Reiners, a lecturing fellow at Duke University, said the biggest winners in the push for tokenization could be a small handful of exchanges like Robinhood that see their trading volumes and influence spike.
'Which is kind of ironic given the origins of crypto, which was to bypass intermediaries,' Reiners said.
Trump bump
Interest in tokenization has also gotten a boost thanks to the election of President Donald Trump, who has made enacting more crypto-friendly regulations a top priority of his administration and signed a new law regulating stablecoins on Friday.
'Tokenization is an innovation and we at the SEC should be focused on how do we advance innovation at the marketplace,' said Securities and Exchange Commission Chairman Paul Atkins.
Is it legal?
Securities law can be complex and even defining what is a security can be a hotly debated question, particularly in crypto. The crypto exchange Binance pulled back offerings of tokenized securities in 2021 after German regulators raised questions about potential violations of that country's securities law.
Under Trump, the SEC has taken a much less expansive view than the previous administration and dropped or paused litigation against crypto companies that the agency had previously accused of violating securities law.
Hilary Allen, a professor at the American University Washington College of Law, said crypto companies have been emboldened by Trump's victory to be more aggressive in pushing what they can offer.
'The most pressing risk is (tokenization) being used as a regulatory arbitrage play as a way of getting around the rules,' she said.
However, the SEC has struck a cautionary tone when it comes to tokens. Shortly after Robinhood's announcement, SEC Commissioner Hester Peirce, who has been an outspoken crypto supporter, issued a statement saying companies issuing tokenized stock should consider 'their disclosure obligations' under federal law.
'As powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset,' Peirce said.
All eyes on private companies
One of the most closely watched areas of tokenization involves private companies, which aren't subject to strict financial reporting requirements like publicly traded ones.
Many hot startups are not going public as often as they used to and instead are increasingly relying on wealthy and institutional investors to raise large sums of money and stay private.
That's unfair to the little guy, say advocates of tokenization.
'These are massive wealth generators for a very small group of rich, well-connected insiders who get access to these deals early,' said Robinhood executive Johann Kerbrat. 'Crypto has the power to solve this inequality.'
'Please be careful'
But Robinhood's giveaway of tokens meant to represent an investment in OpenAI immediately drew pushback from the company itself, which said it was not involved in Robinhood's plan and did not endorse it.
'Any transfer of OpenAI equity requires our approval—we did not approve any transfer,' OpenAI said on social media. 'Please be careful.'
Public companies have strict public reporting requirements about their financial health that private companies don't have to produce. Such reporting requirements have helped protect investors and give a legitimacy to the U.S. financial system, said Allen, who said the push for tokenized sales of shares in private companies is 'eerily familiar' to how things played out before the creation of the SEC nearly a century ago.
'Where we're headed is where we were in the 1920s,' she said. 'Door-to-door salesmen offering stocks and bonds, half of it had nothing behind it, people losing their life savings betting on stuff they didn't understand.'
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


The Sun
28 minutes ago
- The Sun
Range Rover to remove convenient feature for next-gen model as designer bizarrely calls it ‘dirty'
THE ELECTRIC Range Rover will not feature a front trunk, according to the designer of the hotly anticipated SUV. The vehicle is yet to officially debut, with only teasers of its design revealed so far - although fans will be pleased to know the EV version closely mirrors that of the combustion-engine model. 4 4 But one convenient feature found in many electric vehicles won't be included - in a decision partly based on customer feedback. The car's designer, Lynfel Owen, recently referred to the front of the car as the "dirtiest part" and questioned why anyone would want to lean against it to use a front trunk. In an interview with CarExpert, Owen said: 'Why would I want to lean against the dirtiest part of the car to put stuff in?' He explained his reasoning in greater detail: 'We spoke to our customers… none of them have an issue [with] lack of storage space. 'The rear cargo space is exactly the same. We haven't had to raise the floor. The only compromise we have to make is we're not able to offer a seven-seat derivative.' Owen has spent the last decade overseeing JLR's transition to electric power, having risen to chief engineer of vehicle engineering for the Range Rover, Range Rover Sport and Defender models. 'I pretty much only ever worked on Range Rover,' he said. 'I've done a few other projects. I didn't work on the [Jaguar] I-Pace. I was working on the previous-generation Range Rover.' To that end, the I-Pace - launched under the Jaguar brand as the first premium all-electric SUV from any manufacturer when it was revealed in 2016 - became infamous for reliability issues, particularly with its electric drivetrain and battery pack. Its poor customer satisfaction prompted Jaguar Land Rover to learn from its failures, focusing on reliability, improved thermal management and customer-centric design in the development of the Range Rover Electric. Owen said: 'We're making sure we learn from, you know, our mistakes with respect to I-Pace. 'So we're testing all aspects of the car… we've just had a northern hemisphere winter that we've completed, so we've been doing our low-mu testing on the frozen lakes.' He added: 'Some people have got [chargers] bolted on. Their garage might have two or three cars… [so you don't have to use a] 15 metre cable. 'Cabin comfort. Battery temperature. Whether it's to cool it down, whether it's to warm it up. Recovering heat from the air at minus 15… It also reduces the heating energy consumption by over 40 per cent [compared to I-Pace].' This includes the decision to forgo a front trunk, with the rear cargo volume remaining unchanged from the combustion-engine version and the 117-kWh battery pack accommodated without raising the floor. This approach contrasts with the I-Pace, which offered a small front storage compartment. Indeed, due to packaging constraints, the electric Range Rover will only be available with two rows of seats - which rules out a seven-seat option. While a spare wheel will be offered, it will reduce luggage capacity as it will sit above the cargo floor. Much like the upcoming Range Rover, Mercedes' electric G-Class also lacks a front trunk - although they compensated with a uniquely styled tailgate-mounted cargo box. The electric Range Rover will not compete with the G580, Owen claims, as it offers unmatched off-road capabilities, combined with Range Rover's famed luxury. The electric Range Rover's world premiere is expected later this year, with deliveries expected to begin in 2026.


Reuters
an hour ago
- Reuters
EU chief von der Leyen heads to Scotland for trade talks with Trump
BRUSSELS/EDINBURGH, July 26 (Reuters) - EU Commission President Ursula von der Leyen headed to Scotland on Saturday ahead of a meeting with U.S. President Donald Trump on Sunday afternoon, commission spokespeople said, as EU officials said the two sides were nearing a trade agreement. Trump, in Scotland for a few days of golfing and bilateral meetings, told reporters upon his arrival on Friday evening that he was looking forward to meeting with von der Leyen, calling her a "highly respected" leader. He repeated his view that there was a 50-50 chance that the U.S. and the 27-member European Union could reach a framework trade pact, adding that Brussels wanted to "make a deal very badly". If it happened, he said it would be the biggest trade agreement reached yet by his administration, surpassing the $550 billion accord agreed with Japan earlier this week. The White House has released no details about the planned meeting or the terms of the emerging agreement. The European Commission on Thursday said a negotiated trade solution with the United States was within reach, even as EU members voted to approve counter-tariffs on 93 billion euros ($109 billion) of U.S. goods in case the talks collapse. To get a deal, Trump said the EU would have to "buy down" that tariff rate, although he gave no specifics. EU diplomats say a possible deal between Washington and Brussels would likely include a broad 15% tariff on EU goods imported into the U.S., mirroring the U.S.-Japan deal, along with a 50% tariff on European steel and aluminum. The broad tariff rate would be half the 30% duties that Trump has threatened to slap on EU goods from August 1. It remains unclear if Washington will agree to exempt the EU from sectoral tariffs on automobiles, pharmaceuticals and other goods that have already been announced or are pending. Combining goods, services and investment, the EU and the United States are each other's largest trading partners by far. The American Chamber of Commerce in Brussels warned in March that any conflict jeopardized $9.5 trillion of business in the world's most important commercial relationship.


BBC News
an hour ago
- BBC News
Arsenal sign Gyokeres from Sporting for £63m
Arsenal have completed the signing of Sweden striker Viktor Gyokeres from Portuguese club Sporting for 73m euros (£63m).The 27-year-old has signed a five-year deal with the Gunners after the move was held up because of negotiations between the clubs over add-on final sum is made up of a 63m euro transfer fee plus 10m euros in move takes Arsenal's summer spending up to about £204m, following the arrivals of Martin Zubimendi, Kepa Arrizabalaga, Christian Norgaard, Noni Madueke and Cristhian Sport revealed at the start of the month how Mikel Arteta's side had turned their attentions to Gyokeres after hitting an impasse in their bid to sign Benjamin Sesko from RB sporting director Andrea Berta flew to Lisbon to lead negotiations with the Portuguese deal concludes the long-running saga over Gyokeres' future, after he was linked with Manchester United earlier this failed to report back at Sporting for pre-season earlier this month, and the club's president Frederico Varandas said the player would face disciplinary action. More to follow.