Five years after Robinhood (HOOD) stunned users by halting trading in GameStop (GME) and other meme stocks, CEO Vlad Tenev said blockchain-based stocks could help ensure it doesn’t happen again.
In an article on X marking the anniversary of the January 2021 trade freeze, Tenev blamed the chaos not on bad actors, but on poor infrastructure. “What happens when you combine slow, outdated financial infrastructure with unprecedented trading volume and volatility in a small number of stocks,” he wrote. “Massive deposit requirements, trading restrictions and millions of unhappy customers.”
At the time, Robinhood and other brokers were facing massive collateral demands due to the industry’s two-day trade settlement system. To continue operating, Robinhood raised more than $3 billion in emergency funding. “Retail investors who wanted to buy Gamestop were understandably furious,” Tenev continued.
Although regulators later shortened the cycle from T+2 to T+1, meaning one-day settlement, Tenev says that’s still not fast enough. “In a world characterized by 24-hour news cycles and real-time market reactions, T+1 is still far too long,” he said, noting that Friday trades can still take days to settle.
His solution: move the actions on a chain. “Tokenization refers to the process of converting an asset, such as a stock, into a token that lives on a blockchain,” Tenev wrote. “The lack of a long settlement period means much less risk to the system and less pressure on clearinghouses and brokerages, so clients can trade freely how they want, when they want.”
Robinhood was one of the first major players to adopt tokenized stocks. According to Entropy Advisors data on Dune Analytics, the company has created nearly 2,000 tokenized versions of U.S. stocks and ETFs, totaling just under $17 million, according to RWA.xyz. This is still far behind tokenization leaders xStocks and Ondo Global Markets, whose offerings each exceed $500 million.
“In the coming months, we plan to unlock 24/7 DeFi trading and access,” Tenev wrote, highlighting upcoming features such as self-custody, lending, and staking.
But for U.S. markets to follow, he added, regulators must act. Tenev urged lawmakers to pass the CLARITY Act, which would push the SEC to write rules for token stocks. “Let’s seize the opportunity,” he said, “and unlock real-time settlement for retail traders once and for all.” »
