What to watch out for when it comes to tokenisation

Now, I recently spoke about tokenisation to “democratise” finance by letting companies sell stock in the form of a digital asset (token) to the public.

And now, Robinhood Markets, a big retail brokerage trying to make this a reality. It wants to sell SpaceX shares, not to a few rich customers, but to millions of retail customers. So, it hit on the idea of tokenisation.

Traditionally, if companies want to sell stock publicly, they must publish business and financial disclosures with the respective exchange authorities. This way everyone can know what they’re buying.

Companies that sell stock only to big institutional investors, though, can stay private and not make those disclosures. And these days lot of big companies such as SpaceX, OpenAI, Stripe, etc stay private.

A way to own SpaceX and OpenAI with tokens

At the end of June, Robinhood announced the debut of “stock tokens”. And that everyone in Europe that joins the Robinhood platform will be able to claim stock tokens for both OpenAI and SpaceX.

But it won’t be just limited to those two companies. Robinhood’s stock tokens, will cover all kinds of different stocks, trade 24/7 and exist on an Ethereum based blockchain.

These stock tokens are issued by Swiss-based Marex. They’re 1:1 backed, redeemable, and track the underlying asset’s price – including price movements when traditional markets are closed.

There is, however, an important caveat with tokenisation

As Robinhood puts it, “When buying stock tokens, you are not buying the actual stocks – you are buying tokenised contracts that follow their price, recorded on a blockchain.”

So, what is happening here is not that companies are looking to tokenise themselves. After all, OpenAI and SpaceX aren’t looking to go public without complying with disclosure rules. Instead, Robinhood is looking to take them public, without disclosure and against their wishes.

In fact, OpenAI posted on X:

These “OpenAI tokens” are not OpenAI equity. 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.

So, while it’s a significant step, and a first towards “tokenised stocks”, be very aware of what you are investing in – especially when it comes to hot, cutting-edge private companies. You don’t own a piece of SpaceX or OpenAI – like you would investing in publicly-listed stocks.

Nevertheless, I still believe this offering will gain huge traction among retail investors as it expands beyond Europe.

Furthermore, Coinbase will likely be the next big exchange to jump on board. They already support tokenised treasuries, USDC, and real-world asset products through Base. They’ve also recently applied to the Security and Exchange Commission (SEC) for tokenised equity trading on their platform.
Then we might start seeing native crypto exchanges like Binance, Kraken and others finally get to the public markets and open their gigantic user bases to tokenised stocks too.

For listed companies like Coinbase and Robinhood, this offering will attract users. And most importantly, it will generate additional revenue streams. So, right now, it seems owning listed companies like Coinbase and Robinhood might be the safest way to profit from tokenisation.