Latest news with #tokenizedEquity
Yahoo
2 days ago
- Business
- Yahoo
What Are These OpenAI and SpaceX Stock Tokens Robinhood Is Giving Away?
Robinhood earlier this week announced it would give away to eligible European users small "tokenized" stakes in private companies OpenAI and SpaceX, an offering OpenAI said it did not endorse. Federal regulations currently prohibit investors with assets and income below a specific threshold from investing in private companies, which are subject to less stringent financial disclosure rules. Robinhood CEO Vlad Tenev argues tokenizing the equity of private companies will give everyday investors access to the outsized gains that can come from being an early investor in groundbreaking Markets earlier this week said it would offer European users the option to trade 'stock tokens,' and that it would give away $5 worth of 'tokenized' stock in two major private companies, OpenAI and SpaceX, to eligible investors. OpenAI on Wednesday disavowed the offering, writing, 'These 'OpenAI tokens' are not OpenAI equity. We did not partner with Robinhood, were not involved in this, and do not endorse it.' The company urged investors to 'please be careful.' Robinhood CEO Vlad Tenev responded in an X post on Wednesday night: 'While it is true that they aren't technically 'equity' (you can see the precise dynamics in our Terms for those interested), the tokens effectively give retail investors exposure to these private assets.' Separately, a spokesperson said that the tokens provide "indirect exposure... and are enabled by Robinhood's ownership stake in a special purpose vehicle." Elon Musk, the CEO of SpaceX, has not commented publicly on the stock tokens. But he did seize the opportunity to take a jab at OpenAI, with which he has sparred in the past. "Your 'equity' is fake," Musk replied to the company's post. So if stock tokens aren't equity, what are they? Stock tokens are effectively the blockchain equivalent of equity; they represent one's transferrable ownership stake in a company. But they differ from regular stock in a few key ways. First, they're traded on a blockchain rather than on public exchanges. Second, they can be stored in the investor's digital wallet, rather than being held by a custodian, like a brokerage. Third, because they are on-chain, they can be used in other decentralized finance activities, like staking. Tenev, the Robinhood CEO, made the case for stock tokenization in a recent appearance on Bloomberg's 'Odd Lots' podcast. Tokenized stocks can be held directly by the investor who owns them, which gives them more flexibility in trading. Stock that's not in the custody of a brokerage can still be traded when that broker experiences technical difficulties; an urgent sell order can be redirected to a different broker and filled. The decentralized nature of blockchain could make it easier for stocks to trade 24/7. As long as computers are processing transactions on the blockchain, traders can buy and sell stocks without using exchanges and clearinghouses with fixed operating hours. Finally, tokenization makes stock available to put in a collateralized lending pool or to stake, giving investors additional sources of passive income. Robinhood is launching tokenized private company stock in Europe because it has less stringent rules governing private market investment. In the U.S., private markets are accessible only to accredited investors—individuals and businesses with enough money that, in the eyes of the government, they don't need the protections that come from regulatory oversight of public markets. Public companies are required by the Securities and Exchange Commission to make regular financial disclosures and provide the public with material business updates. Private companies have more relaxed disclosure rules, primarily because accredited investors are assumed to be rich or savvy enough to take on the additional risk of private investments. Tenev, in a Washington Post op-ed in January, said opening private markets to retail investors was central to Robinhood's tokenization push. 'Tokenizing private-company stock would enable retail investors to invest in leading companies early in their life cycles, before they potentially go public at valuations of more than $100 billion,' he wrote. There is an obvious benefit to everyday investors being able to invest in the hottest start-ups; under existing rules, the outsized gains that come from early investment often accrue to the wealthy and well-connected. Though, public disclosure rules exist to help everyday investors and their advisors make informed decisions and protect them from fraud, and investing in small upstarts is inherently riskier than buying shares of an established public company. Tenev told 'Odd Lots' that stock tokens could become available in the U.S. without new legislation, and that Robinhood has been discussing tokenization with the SEC's Crypto Task Force. 'I think they're pretty keen to make this happen,' he said, referring to rules that would govern the tokens. Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
OpenAI warns its tokenized stock offered by Robinhood isn't real equity: 'Please be careful'
OpenAI distanced itself from Robinhood's announcement that it would offer "tokenized" equity in the AI giant on its platform. Robinhood revealed plans to offer tokenized shares of private companies like OpenAI and SpaceX to European users. OpenAI said it was not involved in the plan, warning investors to be cautious. OpenAI threw cold water on an announcement from Robinhood this week that said some users could soon buy "tokenized" equity in the AI titan on the popular brokerage app. Robinhood stock has surged this week on news that the company is offering tokenized shares of popular stocks, including shares of private companies OpenAI and SpaceX, to European users. However, the AI startup issued a statement this week that distanced itself from the plan. In a June 2 post on its X account, OpenAI stated that the tokens being offered by Robinhood are not actually equity in the company. "We did not partner with Robinhood, were not involved in this, and do not endorse it. Any transfer of OpenAI equity requires our approval—we did not approve any transfer," the posted stated. OpenAI ended the statement advising potential investors to "please be careful." Tokenized assets are blockchain-enabled representations of securities like stocks. Importantly for investors, though, they are not the same as owning equity in a company, and the price of the tokens may not be correlated with an underlying stock. OpenAI and SpaceX rank among the world's most valuable and high-profile private companies. Although Robinhood's token offering is only available to European users, it sparked considerable interest from retail investors who viewed it as a way to gain exposure. In a statement to Business Insider, a Robinhood spokesperson said: "To cap off our recent crypto event, we announced a limited stock token giveaway on OpenAI and SpaceX to eligible European customers. These tokens give retail investors indirect exposure to private markets, opening up access, and are enabled by Robinhood's ownership stake in a special purpose vehicle." Additionally, CEO Vlad Tenev followed the post with one of his own, providing some context on the equity statements. "While it is true that they aren't technically "equity" (you can see the precise dynamics in our Terms for those interested), the tokens effectively give retail investors exposure to these private assets," he said. Tenev added that Robinhood's giveaway "plants a seed for something much bigger," claiming that since the announcement, other private companies have expressed interest in joining the "tokenization revolution" though he offered no specific details. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
OpenAI Warns That Tokenized Equity Sale on Robinhood Is Unauthorized
Tokenized equity offerings for OpenAI being offered to Robinhood users in Europe are not officially authorized by the company, the AI giant said in a social media post. "These 'OpenAI tokens' are not OpenAI equity. We did not partner with Robinhood, were not involved in this, and do not endorse it," OpenAI posted on X. "Any transfer of OpenAI equity requires our approval — we did not approve any transfer." Earlier this week, Robinhood announced it was launching tokenized stock trading based on the Arbitrum blockchain to its users in Europe. As CoinDesk reported earlier, users will have access to 200 equities and ETFs, as well as a secondary market for equity in hot startups like OpenAI and SpaceX. The idea of tokenized equity in not-yet public companies is nothing new. In 2018, a blockchain startup called Swarm said it would soon be offering tokenized shares in startups — including Robinhood. CoinDesk reported at the time that many of the companies Swarm claimed it would be offering equity in pushed back and said such a sale would be unauthorized but Swarm said everything came from "approved secondary market transactions." Looking at Robinhood's current tokenized offering, it's unclear where the source of equity is. There is some speculation that the equity represents interest in OpenAI shares that have been already acquired via authorized channels, based on comments made by Robinhood's CEO. Others have warned that OpenAI — and other startups — would be well within their rights not to honor the sale. "I expect this natural tension to result in more private companies just cancelling equity sales altogether for those who violate their shareholders' agreements," Dragonfly General Partner Rob Hadick posted on X. Robinhood did not respond to a request for comment from CoinDesk.
Yahoo
26-06-2025
- Business
- Yahoo
Bitfinex Securities Is Taking a Different Approach to RWAs, Launches Two New Products in the UK
These days, the mention of blockchain-based real world assets (RWAs) conjures up traditional finance institutions, like BlackRock, presiding over billions of dollars in tokenized money market funds. But the original promise of crypto was about opening up finance opportunities to anyone. That's the ethos Bitfinex Securities is sticking to with its latest tokenized equity issuances: two alternative finance products in the UK, one focused on community banking debt, the other on litigation relating to mis-sold car finance claims. Announced on Wednesday, Bitfinex Securities' 'TITAN1' product will allocate 5 million british pounds ($6.8 million) into subordinate debt issued by Castle Community Bank, a firm supporting loans to financially excluded customers in Edinburgh, Scotland. This alternative debt product will provide investors with a 20% dividend per annum (net of fees), which will be paid quarterly for up to 10 years, with non-callable provisions for the first 5 years, according to a press release. The second structure, 'TITAN2,' will invest 100 million british pounds ($136 million) into litigation financing related to car finance mis-selling claims in the UK, a market expected to generate billions in compensation. Funds will be deployed through equity-linked notes and Investors will receive a 50% share of the claims recovery proceeds split proportionately among investors, Bitfinex Securities said. Both listings will be accessible to investors as tradable tokens via Bitfinex Securities' secondary market. The tokens have been issued on the Liquid Network, a side chain of Bitcoin developed by technology firm Blockstream, where transfers require issuer authorization, with a whitelist system ensuring compliance standards and jurisdictional requirements. Looking back in time, Bitfinex Securities' foray into tokenized RWAs pre-dates by some years the current trend for blockchain-based financial assets issued by institutions like BlackRock or Franklin Templeton. The firm started out with niche products like a tokenized bitcoin mining hashrate contract linked to Blockstream, followed by a number of bond issuances, including the first tokenized U.S. Treasuries offering in the nascent crypto hub of El Salvador, bringing T-Bill investments to individuals and organizations who were previously unable to access these products. Jesse Knutson, head of operations at Bitfinex Securities, takes a philosophical view of the current tokenization trend. 'We want to be able to help people bridge that gap to investors,' Knutson said in an interview. 'Whether it's a company or a bond issuance, or whatever it is, to raise capital and kind of fill that gap that's left by banks in many parts of the world that just aren't willing to lend, or where people struggle to get access to capital.' Fresh off a digital assets panel in London alongside BlackRock and UK asset manager Schroders, Knutson said there's something of a bias in the ecosystem towards fixed income. Most of the focus is around money market funds, where people tend to buy and hold to get a yield, so there's just not a lot of trading, he said. 'A big part of this is about disintermediation, and I think that's something the institutional guys don't quite get,' Knutson said. 'When you look at the details of what they've actually done, it's typically left hand to right hand. It's the same kind of people. It's going through depositories, it's going through transfer payment agents, all of the normal kind of parts of the traditional ecosystem, which I don't think are technologically probably necessary.'Sign in to access your portfolio
