Robinhood’s strategic embrace of blockchain technology and tokenization has fueled a nearly 30% rally in its stock over the past month, highlighting the brokerage’s new growth drivers despite regulatory scrutiny of some of its products.
Robinhood stock, trading under the ticker HOOD, surged on Wednesday to $94.65 in New York trading, putting it within 4% of its all-time closing high set on July 2.
The stock has climbed more than 27% over the past month and is up 137% year-to-date, lifting its market capitalization to over $82 billion.
While Robinhood’s share price has been lifted by a range of factors — including a 50% year-over-year revenue surge in the first quarter to $927 million — its gains accelerated at the end of June after the company unveiled a tokenization-focused layer-2 blockchain.
Built on Arbitrum, the new blockchain will enable Robinhood to offer tokenized US stocks and exchange-traded products to investors in Europe.
In the United States, Robinhood has also proposed creating the Real World Asset Exchange, a platform for onchain settlement of real-world assets.
Related: VC Roundup: DeFi, AI, hybrid exchanges showcase resilient month for crypto
Robinhood CEO doubles down on tokenization
Robinhood’s tokenization push has been well-received by investors, but regulators in Europe have raised concerns about the company’s so-called tokenized equity offerings, which reportedly provide exposure to privately held companies.
The central bank of Lithuania — Robinhood’s primary regulator in Europe — has requested more information from the brokerage about its stock token offerings tied specifically to OpenAI and SpaceX.
Robinhood CEO Vlad Tenev has clarified that these products are not technically equity offerings but still give investors exposure to these companies. According to Galaxy Research, such private equity tokens function more like “derivatives” that provide indirect exposure to non-public firms.
In a Tuesday interview with Bloomberg News, Tenev said that many private companies have approached Robinhood about making their equity accessible to investors through the same type of private equity tokens used for SpaceX and OpenAI.
Related: OpenAI says Robinhood tokens are not equity in the company
