Latest news with #VladTenev
West Australian
2 days ago
- Business
- West Australian
THE ECONOMIST: The Cryptocurrency big bang is a game-changer that will revolutionise finance
Among the strait-laced denizens of Wall Street, crypto's 'use cases' are often discussed with a smirk. Veterans have seen it all before. Digital assets have come and gone, often in style, sending hype-prone investors in memecoins and NFTs on a ride. Their use as anything other than a tool for speculation and financial crime has been repeatedly found wanting. Yet the latest wave of excitement is different. On July 18th US President Donald Trump signed the GENIUS Act into law, providing stablecoins — crypto tokens backed by conventional (usually dollar) assets — with the regulatory certainty that insiders have long craved. The industry is booming; Wall Streeters are now scrambling to get involved. 'Tokenisation' is also taking off: a rapidly growing volume of assets trade on blockchains, representing stocks, money-market funds, and even private-equity stakes and debt. As with any revolution, the insurgents are euphoric and the old guard concerned. Vlad Tenev, chief executive of Robinhood, a digital-assets broker, says the new tech can 'lay the groundwork for crypto to become the backbone of the global financial system'. Christine Lagarde, President of the European Central Bank, sees things a little differently. She worries that the rush of new stablecoins amounts to nothing less than 'the privatisation of money'. Both appreciate the scale of the change at hand. The present moment holds the potential of something far more disruptive for mainstream markets than earlier crypto speculation. Whereas bitcoin and other cryptocurrencies promised to be digital gold, tokens are wrappers, or vehicles representing other assets. That may sound unimpressive, but some of the most transformative innovations in modern finance simply changed the way in which assets are packaged, sliced and reconstituted — the exchange traded fund (ETF), the eurodollar and securitised debt among them. Today there are $US263 billion ($398b) in stablecoins in circulation, some 60 per cent more than a year ago. Standard Chartered, a bank, expects the market to be worth $US2 trillion in three years' time. Last month JPMorgan Chase, America's biggest bank, announced plans for a stablecoin-like product called JPMorgan Deposit Token (JPMD), despite the long-held crypto scepticism of the firm's boss, Jamie Dimon. The market for tokenised assets is worth just $US25b but has more than doubled in size over the past year. On June 30 Robinhood launched over 200 new tokens for European investors, enabling them to trade American stocks and ETFs outside of ordinary trading hours. Stablecoins allow for transactions that are cheap and fast, as ownership is registered instantaneously on digital ledgers, cutting out intermediaries who run traditional payment rails. This is especially valuable for cross-border transactions that are currently expensive and slow. Although stablecoins are now involved in less than 1 per cent of financial transactions around the world, the GENIUS Act will provide a boost. It confirms stablecoins are not securities, and requires the coins to be fully backed by safe, liquid assets. Retail giants, including Amazon and Walmart, are reportedly considering their own coins. To consumers, these might work like a gift card, providing a balance to spend with the retailer, perhaps at lower prices. That would cut out firms such as Mastercard and Visa, which make a margin of 2 per cent or so on sales they facilitate in America. Tokenised assets are a digital copy of another asset, whether that is a fund, a share in a company or a bundle of commodities. Like stablecoins, they can make financial transactions faster and easier, particularly ones involving less liquid assets. Some offerings are gimmicky. Why tokenise individual stocks? Doing so may enable 24-hour trading, since the exchanges on which the shares are listed do not need to be open, but the advantages of that are questionable. And marginal trading costs are already very low, or even zero, for many retail investors. A lot of offerings are less gimmicky, however. Consider money-market funds, which invest in Treasury bills. A tokenised version could double as a form of payment. The tokens are, like stablecoins, backed by safe assets, and can be swapped seamlessly on blockchains. They are also an investment that beats bank interest rates. The average American savings account offers a rate of less than 0.6 per cent; many money-market funds offer yields of 4 per cent. BlackRock's tokenised money-market fund, the largest, is now worth over $US2b. 'One day, I expect tokenised funds will become as familiar to investors as ETFs,' wrote Larry Fink, the firm's boss, in a recent letter to investors. This will prove disruptive for incumbents. Banks may be trying to get involved with the new digital wrappers, but they are doing so in part because they are aware tokens are a threat. A combination of stablecoins and tokenised money-market funds could, in time, make bank deposits a less attractive product. The American Bankers Association notes that if banks lost about 10 per cent of their $US19t in retail deposits — their cheapest form of funding — it would raise their average funding cost from 2.03 per cent to 2.27 per cent. Although total deposits, including commercial accounts, would not be reduced, bank margins would be squeezed. The new assets may also prove disruptive for the broader financial system. Holders of Robinhood's new stock tokens, for example, do not actually own the underlying securities. Technically, they own a derivative that tracks the value of the asset, including any dividends the company pays, rather than the stock itself. Thus they do not gain the voting rights usually conveyed by stock ownership. And if the issuer of the tokens goes bankrupt, the owners would find themselves in a difficult legal situation, competing with the collapsed firm's other creditors over who should take possession of the underlying assets. Something similar has happened with Linqto, a fintech startup that filed for bankruptcy earlier this month. The company had offered shares in private firms through special-purpose vehicles. Buyers are now unclear whether they own the assets they believed they possessed. It is one of the greatest opportunities for tokenisation that presents the greatest difficulty for regulators. Pairing illiquid private assets with easily exchanged tokens opens a cloistered market toms of retail investors, who have trillions of dollars of capital to allocate. They could buy slivers of the most exciting private companies, currently beyond their reach. This raises questions. Agencies such as the Securities and Exchange Commission (SEC) have far more sway over publicly listed firms than private ones, which is what makes the former suitable for retail investment. Tokens representing private shares would turn once-private stakes into assets that could be traded as easily as an ETF. But whereas the issuers of an ETF promise to provide intraday liquidity by buying and selling the underlying assets, the providers of tokens do not. At a large enough scale, tokens would in effect turn private firms into public ones, without any of the disclosure requirements normally required. Even pro-crypto regulators want to mark clear lines in the sand. Hester Peirce, a SEC commissioner known as 'crypto mom' for her digital-friendly approach, emphasised in a statement on July 9 that tokens ought not to be used to skirt securities laws. 'Tokenised securities are still securities,' she wrote. As such, disclosure rules for companies issuing securities will be enforced, regardless of whether the securities come wrapped in new crypto packaging. Although that makes sense in theory, a plethora of new assets with novel structures means that watchdogs will be playing catch-up endlessly in practice. So there is a paradox. If stablecoins are to be truly useful, they will also be truly disruptive. The more attractive tokenised assets are to brokers, customers, investors, merchants and other financial firms, the more they will change finance, in ways both welcome and worrying. Whatever the balance between the two, one thing is already clear: the view that crypto has not produced any innovations of note can be consigned to the past.
Japan Today
3 days ago
- Business
- Japan Today
The risks and rewards of tokenization as crypto heavyweights push for it
By ALAN SUDERMAN As cryptocurrencies become more intertwined with the traditional financial system, industry heavyweights are racing for a long-sought goal of turning real-world assets into digital tokens. '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. 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.' 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. 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. 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. 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. 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.' 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.' © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
AU Financial Review
4 days ago
- Business
- AU Financial Review
Risks and rewards of tokenisation as crypto heavyweights push for it
As cryptocurrencies become more intertwined with the traditional financial system, industry heavyweights are racing for a long-sought goal of turning real-world assets into digital tokens. 'Tokenisation is going to open the door to a massive trading revolution,' said Vlad Tenev, the chief executive of the trading platform Robinhood at a recent James Bond-themed tokenisation launch event in the south of France. AP
Qatar Tribune
4 days ago
- Business
- Qatar Tribune
The risks and rewards of tokenization as crypto heavyweights push for it
Agencies As cryptocurrencies become more intertwined with the traditional financial system, industry heavyweights are racing for a long-sought goal of turning real-world assets into digital tokens. '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. 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.'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 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. 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 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 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.' 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.
Yahoo
4 days ago
- Business
- Yahoo
Here's How "Tokenized" Stocks Are Revolutionizing Investment Access
Key Points Robinhood is now offering tokenized stocks to European investors, with plans to offer them to U.S. investors soon. Tokenized stocks are blockchain versions of traditional stocks, and can be traded just like crypto tokens. Before investing in tokenized stocks, it's important to read all the fine print, to make sure you understand what you actually own. 10 stocks we like better than Robinhood Markets › Tokenization has been one of the hottest buzzwords in the crypto industry for the past 12 months. Now we're finally starting to see what can happen when blockchain technology meets traditional stock market investing. On June 30, Robinhood Markets (NASDAQ: HOOD) shook up the financial world with the launch of tokenized stocks for retail investors. According to Robinhood Chief Executive Officer Vlad Tenev, these tokenized stocks represent the greatest innovation in capital markets in decades. But what, exactly, are they? And what do they mean for investors? What are tokenized stocks? Tokenization refers to the transformation of real-world assets into digital assets that live on the blockchain. Ownership in that asset is represented by a digital token that can be traded just like any crypto token. In this case, the real-world assets being transformed are stocks, and the place to trade them is on Robinhood's trading platform. For now, trading in these tokenized stocks will take place 24/5, but according to Robinhood, trading will soon be 24/7. It can be helpful to think of these tokenized stocks as digital twins. Robinhood buys a real-world stock, and then, with a little blockchain alchemy, transforms that into a digital token. In theory, this digital token will then mimic the price action of the real-world stock on a 1:1 basis. If the value of Company X goes up by 10% in one day, then the value of your token will go up by 10% as well. Pros Tokenization provides a number of advantages for retail investors. For one, investors get the enhanced liquidity of being able to trade these tokens on the blockchain. Second, they get access to the speed, efficiency, security, and transparency of blockchain technology. Third, they can trade tiny fractional shares of any company's stock that has been tokenized. According to Robinhood, tokenized stocks will modernize the traditional system of buying and selling stocks. If you've ever been frustrated by not being able to trade equities on the weekend or on holidays, then tokenized stocks represent a possible solution. In addition, once you have the token, you can then do different things with it that simply aren't possible in the world of traditional finance, all thanks to the power of decentralized finance. Robinhood is launching its tokenized stock offerings in Europe first, as a way of giving European investors access to the U.S. market. Robinhood says that more than 200 tokenized stocks and exchange-traded funds (ETFs) will be available for trading on its platform. In the future, U.S. investors might be buying tokenized stocks from Europe, Asia, or Latin America. Cons However, there are drawbacks to tokenized stocks. The primary goal is to give investors exposure to the price of the underlying real-world stock. They do not confer any traditional stock ownership privileges. There are no voting rights, for example. And if the stock pays dividends, you may not receive those dividends. You really have to read the fine print. For example, Robinhood says that its tokenized stocks will, indeed, pay dividends to investors. It depends on the blockchain smart contracts and how they are written for each token. Things get more complex once you move beyond publicly traded companies. For example, it is also possible to create tokenized equity in private companies. At its June investor event in France, Robinhood actually gave away tokens for OpenAI and SpaceX, arguably two of the hottest privately held tech companies right now. That caused a bit of an uproar. OpenAI, for example, immediately spoke out and said that these tokens are not OpenAI equity, and do not represent any type of ownership interest in the company. The company did not work with Robinhood on the launch of these tokens, and warned investors to be careful. Robinhood says that the ultimate goal is to open up the world of private markets to retail investors. Why should ultra-wealthy accredited investors be the only ones who can invest early in a hot tech company? Why should venture capitalists be the primary gatekeepers to these companies? That's potentially what makes tokenized stocks so revolutionary. They could lead to a transfer of power, money, and influence in the financial world. They could fundamentally change the way we think about the valuation of companies, both public and private. And they could forever blur the line between investing in public companies and investing in private companies. Outlook for American investors Right now, regulators in the U.S. are racing to keep up with the pace of crypto innovation. Until all the regulatory issues get worked out, these tokenized stocks from Robinhood will only be available to European investors. The good news is that several crypto platforms, in competition with Robinhood, are now working on tokenized stocks for U.S. investors. My prediction is that tokenized stocks will be mainstream in the U.S. by the end of next year. Now that the Trump administration has let the crypto genie out of the bottle, crypto innovation is taking place at an unprecedented scale and pace. Tokenized stocks are just the first in what should be a long line of new innovations for the individual investor. Should you buy stock in Robinhood Markets right now? Before you buy stock in Robinhood Markets, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Robinhood Markets wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Dominic Basulto has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Here's How "Tokenized" Stocks Are Revolutionizing Investment Access was originally published by The Motley Fool
