Robinhood is launching “Robinhood Chain,” a new blockchain system based on Ethereum and Arbitrum Orbit, which is set to shake up traditional stock exchanges like the NYSE, says Galaxy Digital.
Reports indicate that Robinhood can effectively operate its blockchain, generating over $150,000 daily by keeping transaction fees, similar to Coinbase’s Base rollup. This method allows Robinhood to turn its blockchain into a product for developers to create apps using tokenized assets like digital stocks.
Their acquisition of Bitstamp enables trading even outside regular market hours, posing a challenge to major exchanges like the NYSE. However, this continuous trading poses risks due to price fluctuations when not monitored, potentially lowering traditional exchange fee revenues.
There are regulatory limitations, as the SEC’s stance on Robinhood’s plan, which targets European users but involves U.S. companies, is uncertain. SIFMA has cautioned the SEC against permitting these tokenized trades outside of established regulations.
Tokenized assets offer more flexibility than traditional ones, fostering innovation in areas like decentralized finance, which could pressure older exchanges to adapt.
Announced by CEO Vlad Tenev at a conference, this platform will allow its users to trade digital versions of stocks directly on the blockchain, skipping regular trading hours.
The initiative, leveraging Robinhood’s acquisition of crypto exchange Bitstamp, aims to offer near-instant settlement and initially 24/5 trading, with plans for 24/7 trading. Users can hold these tokens themselves or use them in decentralized apps.
These tokens can do things that regular stocks can’t, like being used as collateral in crypto finance apps or automatically paying dividends. According to Galaxy Digital, this shift to blockchain trading could pull businesses away from traditional exchanges, which make money from trading fees and data, by offering more flexible and innovative options.
However, Galaxy Digital warns that 24-hour trading could be risky for regular investors, as prices might change sharply overnight.
Also Read: Robinhood Stock Drops as OpenAI Denies Links to Equity Token
