Robinhood’s inventory token choices are underneath regulatory scrutiny within the European Union after OpenAI warned traders that the digital brokerage’s so-called OpenAI tokens don’t symbolize any fairness stake within the firm.
OpenAI’s warning prompted an inquiry by Lithuania’s central financial institution, which serves as Robinhood’s major regulator within the area.
The Financial institution of Lithuania is “awaiting clarifications” relating to Robinhood’s inventory token choices linked to OpenAI and SpaceX, CNBC reported on Monday, citing Giedrius Šniukas, a spokesperson for the Financial institution of Lithuania.
“Solely after receiving and evaluating this data will we be capable of assess the legality and compliance of those particular devices,” mentioned Šniukas.
Robinhood’s push into tokenization culminated on June 30 with the launch of a layer-2 blockchain to assist its tokenized securities choices within the European Union. The brokerage said it plans to issue greater than 200 US inventory and exchange-traded fund (ETF) tokens to traders in Europe.
Nonetheless, the backlash facilities on Robinhood’s so-called non-public fairness tokens for firms that aren’t publicly traded, primarily OpenAI and SpaceX. As Cointelegraph noted, OpenAI has already clarified that these tokens don’t symbolize fairness within the firm.
As Galaxy Analysis famous, these fairness tokens are basically “derivatives that present oblique publicity to the underlying asset.”
Associated: Tokenized equity still in regulatory grey zone — Attorneys
Proudly owning a chunk of the rising tokenization pie
Like different brokerage companies, Robinhood is vying for a share of the quickly increasing tokenization market, which is valued at over $24 billion, in accordance with trade estimates.
Though some insiders, akin to Plume CEO Chris Yin, query the reported measurement of the market attributable to knowledge monitoring challenges, main establishments like BlackRock and Franklin Templeton have entered the area.
A latest report by RedStone famous that tokenization is gaining traction in non-public credit score markets by decreasing obstacles to entry and bettering settlement occasions and liquidity. The report discovered that non-public credit score and US Treasury debt are at present the biggest drivers of tokenization.
On the latest Tokenize This convention in New York, trade executives argued that tokenized stocks alone may symbolize a trillion-dollar alternative.
Associated: Tokenized funds are scaling fast, hitting $5.7B — Moody’s
