Five years after Robinhood (HOOD) shocked users by halting trading in GameStop (GME) and other meme stocks, CEO Vlad Tenev said blockchain-based stocks could help ensure that doesn’t happen again.
In a post on X marking the anniversary of the January 2021 trading freeze, Tenev blamed the chaos on bad actors rather than poor infrastructure. “What happens when you combine slow, outdated financial infrastructure with unprecedented trading volumes and volatility in a handful of stocks,” he wrote. “Substantial deposit requirements, trading restrictions, and millions of unhappy customers.”
At the time, Robinhood and other brokers faced massive collateral demands due to the industry’s two-day trade settlement system. To stay afloat, Robinhood raised more than $3 billion in emergency funding. “Retail investors who wanted to buy Gamestop were understandably angry,” Tenev continued.
Although regulators later shortened the cycle from T+2 to T+1, or one-day settlement, Tenev said this was still not fast enough. “In a world of 24-hour news cycles and real-time market reactions, T+1 is still too long,” he said, noting that Friday’s trades could still take several days to settle.
His solution: move the shares on-chain. “Tokenization refers to the process of converting assets such as stocks into tokens that exist on the blockchain,” Tenev wrote. “The absence of lengthy settlement periods means the system is far less risky and there is less pressure on clearinghouses and brokerage firms, so customers are free to trade when they want.”
Robinhood was one of the first major players to embrace tokenized stocks. RWA.xyz said it has minted nearly 2,000 tokenized versions of U.S. stocks and ETFs with a total value of just under $17 million, according to data from Entropy Advisors on Dune Analytics. That’s still far behind tokenization leaders xStocks and Ondo Global Markets, both of which have products in excess of $500 million.
“Over the next few months, we plan to unlock 24/7 trading and DeFi access,” Tenev wrote, pointing to upcoming features such as self-custody, lending, and staking.
But for the U.S. market to follow suit, regulators must take action, he said. Tenev urged lawmakers to pass the Clarity Act, which would push the SEC to develop rules for tokenized stocks. “Let’s seize the moment,” he said, “and turn on real-time settlement for retail traders once and for all.”