Robinhood’s inventory token choices are beneath regulatory scrutiny within the European Union after OpenAI warned buyers that the digital brokerage’s so-called OpenAI tokens don’t characterize 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” concerning 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 info will we be capable to 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 help 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 buyers in Europe.
Nonetheless, the backlash facilities on Robinhood’s so-called personal fairness tokens for corporations that aren’t publicly traded, primarily OpenAI and SpaceX. As Cointelegraph noted, OpenAI has already clarified that these tokens don’t characterize fairness within the firm.
As Galaxy Analysis famous, these fairness tokens are primarily “derivatives that present oblique publicity to the underlying asset.”
Associated: Tokenized equity still in regulatory grey zone — Attorneys
Proudly owning a bit of the rising tokenization pie
Like different brokerage corporations, 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 house.
A latest report by RedStone famous that tokenization is gaining traction in personal credit score markets by decreasing boundaries to entry and enhancing settlement occasions and liquidity. The report discovered that non-public credit score and US Treasury debt are at the moment the biggest drivers of tokenization.
On the latest Tokenize This convention in New York, trade executives argued that tokenized stocks alone might characterize a trillion-dollar alternative.
Associated: Tokenized funds are scaling fast, hitting $5.7B — Moody’s
