Thomas Daniels
Galaxy Digital has warned that Robinhood’s initiative to tokenize stocks through its forthcoming blockchain—dubbed “Robinhood Chain”—could redirect liquidity from centralized exchanges such as the NYSE. This shift threatens key revenue streams derived from trading fees and market-data sales.
At EthCC 2025, Robinhood CEO Vlad Tenev introduced the concept of Robinhood Chain, an Ethereum‑compatible layer‑2 built atop Arbitrum Orbit. The platform will enable users to trade tokenized derivatives of equities directly on‑chain, bypassing traditional market hours.
Tenev explained that Robinhood’s proprietary token engine will wrap real stock shares—custodied by a U.S. broker‑dealer—into tradeable tokens. Users can self‑custody these tokens or engage via decentralized applications. Near‑instant settlements will support trading 24/5 initially, with 24/7 capabilities planned. Robinhood will leverage its recent acquisition of crypto platform Bitstamp to implement the project.
Competitive Challenge to TradFi Giants
In a Friday analysis, Galaxy Digital noted that by placing assets on-chain, Robinhood is eroding the consolidated liquidity pools that have long underpinned exchanges like the NYSE. “This directly challenges the deep concentration of liquidity and activity that gives major TradFi exchanges… their competitive advantage,” the report states .
The platform’s architecture mirrors rollup models such as Coinbase Base, where centralized sequencers capture transaction fee revenue. Galaxy estimates Coinbase Base generates over $150,000 daily in sequencer fees. By controlling its sequencer and tokenized assets, Robinhood stands to monetize every stage of the trading lifecycle—from off-chain execution to on-chain utility.
Programmability and DeFi Use Cases
In addition to extended trading hours, tokenized assets introduce programmable features—like using tokenized shares as collateral in decentralized finance (DeFi) or automating dividend distributions. These capabilities offer a competitive edge over standard equities. Galaxy Digital cautions that if traditional exchanges fail to adapt, they “risk becoming custodians of a less functional version of the same assets” .
Risks and Regulatory Unknowns
While the model offers innovative utility, it carries volatility risks. Retail investors could encounter pronounced overnight price swings. Regulatory ambiguity further complicates the landscape: although Robinhood’s tokens will be available first in the EU, the U.S. Securities and Exchange Commission has yet to comment. The Securities Industry and Financial Markets Association (SIFMA) has urged the SEC to reject trading of tokenized equities outside Regulation NMS .
