Galaxy Digital Suggests Robinhood’s Tokenized Stocks Could Potentially Shift Liquidity from NYSE

Key Points

1. Robinhood announced the 'Robinhood Chain,' an Ethereum-compatible layer-2 solution built on Arbitrum Orbit, designed to tokenize stocks for blockchain-based trading.

2. The platform will initially offer 24/5 trading with plans to expand to 24/7, challenging traditional exchanges like the NYSE by diverting liquidity onchain.

3. Tokenized stocks provide benefits such as enhanced liquidity and settlement speed but face regulatory uncertainty, with availability currently limited to EU users and no clear SEC guidance in the US.

4. Industry groups like SIFMA have urged the SEC to maintain existing regulations, highlighting the need for clear regulatory frameworks for tokenized assets.

5. Robinhood's initiative reflects the growing integration of blockchain in traditional finance, though volatility and regulatory risks remain significant hurdles.