Bernstein says an ‘equity tokenization wave’ is coming, despite the Robinhood–OpenAI controversy

Regulatory tailwinds are set to usher in an "equity tokenization wave," according to analysts at research and brokerage firm Bernstein — despite the controversy between OpenAI and Robinhood last week.

At a flashy promotional event in Cannes on June 30, Robinhood CEO Vlad Tenev unveiled the firm's tokenized stocks product, including offering EU customers more than 200 public U.S. equities and stakes in private companies like OpenAI and SpaceX minted as tokens on Arbitrum. That came alongside a slew of other crypto product launches, including perpetual trading and staking, as well as its own Ethereum Layer 2 network.

Tenev framed the OpenAI and SpaceX tokens as "a seed for something much bigger," aiming to bring more private companies into the tokenization trend. However, OpenAI pushed back on the move, saying it did not authorize any token representing its stock, with the Sam Altman-led firm urging investors to review official filings before purchasing the instruments.

"OpenAI said they did not consent and OpenAI equity token is not equity without the equity rights and company consent," the Bernstein analysts led by Gautam Chhugani explained to clients in a Monday note. "Robinhood on its part made disclosures on the product structure — OpenAI equity tokens were backed by a Robinhood special purpose vehicle which owns the actual equity, thus it was a derivative of the underlying. Further, these are private, unlisted stocks and not redeemable/transferable, unless Robinhood enables this functionality (completely at its discretion)."

Tokenizing private equity often lacks key rights like company consent and right of first refusal, as Robinhood noted. While firms like OpenAI and SpaceX already have private market liquidity, there's strong demand for tokenizing less liquid private assets, the Bernstein analysts wrote.

"We believe, Robinhood created enough headlines and got enough marketing on the idea of tokenization, which was the objective behind the product launch," Chhugani said. "It will continue iterating on the product, as it works towards building a marketplace for listed and unlisted equities — globally and in the U.S. when the regulatory framework is ready."

Robinhood joins Bybit, Kraken, and Gate in offering tokenized shares aimed at non-U.S. investors.

Supportive SEC signals and regulatory clarity

The analysts argued that the SEC's more supportive stance on equity tokenization and tokenization in general will open up access for investors, providing a lighter regulatory approach for private companies to bring liquidity to their equity via blockchain-based tokens. 

If the stablecoin-related GENIUS Act passes, focus will shift to the CLARITY Act, the analysts said, defining token securities vs. token commodities and allowing platforms like Robinhood and Coinbase to trade both on the same platform under CFTC and SEC oversight. Amid SEC Commissioner Hester Pierce's comments on the market structure framework and its implications on alternate trading platforms like Robinhood and Coinbase, equity tokenization is likely to advance regardless, they added.

In a letter to the SEC earlier this year, Robinhood argued that tokenizing real-world assets can improve settlement, transparency, and cost effectiveness, calling for clear, unified rules treating tokenized and traditional assets equally. It urged approving broker-dealers to custody both, recognizing tokens as "allowable assets" — eliminating the current requirement for a 100% haircut and non-allowable status on digital assets for net capital purposes — and exempting blockchain-native functions like mining and validating from "outdated" clearing and transfer rules.

Gautam Chhugani maintains long positions in various cryptocurrencies. Certain affiliates of Bernstein act as market makers or liquidity providers in the equity securities of Robinhood and Coinbase.

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