Robinhood has begun offering tokenised shares in private companies, sparking backlash from OpenAI as one of the targeted firms.
During an event in Cannes on Monday, Robinhood co-founder and CEO Vlad Tenev displayed what he described as “stock tokens” for OpenAI and SpaceX. The move forms part of Robinhood’s European expansion, which also includes offering more than 200 tokenised shares of publicly-traded US stocks to EU users.
Tenev told attendees that European users who download the Robinhood app would have the opportunity to own tokenised shares in OpenAI and Elon Musk’s space exploration venture SpaceX, both of which are private companies that haven’t announced plans to go public.
The trading platform explains on its website: “Robinhood Stock Tokens follow the prices of publicly-traded stocks and ETFs — they are derivatives tracked on the blockchain, giving you exposure to the US market. When buying stock tokens, you are not buying the actual stocks — you are buying tokenised contracts that follow their price, recorded on a blockchain.”
This distinction means token holders wouldn’t enjoy traditional shareholder rights, such as voting privileges, despite having financial exposure to the companies.
OpenAI rebuffs Robinhood’s tokenised shares offering
The announcement triggered a sharp rebuke from OpenAI. The high-profile AI firm, led by Sam Altman, categorically denied any involvement with Robinhood’s initiative.
“These ‘OpenAI tokens’ are not OpenAI equity,” the company stated in a post on X. “We did not partner with Robinhood, were not involved in this, and do not endorse it. Any transfer of OpenAI equity requires our approval — we did not approve any transfer. Please be careful.”
Industry observers note that Robinhood’s approach appears designed to provide price exposure to underlying equities rather than actual ownership, likely structured this way to navigate complex regulatory requirements.
This mechanism bears similarities to offerings from other financial technology firms. For instance, cryptocurrency platform Kraken offers products called xStocks that likewise don’t represent direct equity ownership but are instead backed by underlying shares.
The introduction of tokenised shares like OpenAI represents Robinhood’s latest effort to expand its footprint in Europe while broadening its cryptocurrency and blockchain-based offerings. During the same announcement, the company promoted the launch of tokenised US equities in Europe, alongside perpetual trading and staking capabilities for American users.
Implications for private market investment
Robinhood’s initiative, if successful despite the pushback, could democratise access to sought-after private companies whose shares are typically available only to institutional investors, venture capitalists, and accredited individual investors.
However, the controversy highlights the challenges of bringing innovation to regulated financial markets, particularly when dealing with private companies that maintain tight control over their equity.
Financial experts caution that potential investors should thoroughly understand the distinction between these tokenised derivatives and actual equity ownership. The value proposition and risks differ significantly from traditional share ownership, even as they provide exposure to previously inaccessible investment opportunities.
Robinhood’s broader European expansion continues apace, with the company keen to capitalise on growing interest in both American equities and cryptocurrency investments among European traders. Whether the issue of tokenised shares, and the subsequent backlash from companies like OpenAI, will help or hinder those ambitions remains to be seen.
See also: Flood of interest in Europe’s AI Gigafactories plan
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Published on The Digital Insider at https://is.gd/eIdAg8.
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