"Robinhood pushes for 24/7 trading through stock tokenization…Threatens NYSE revenues"

Global financial trading platform Robinhood is moving to tokenize stocks through its own blockchain, a trend that is now being analyzed as a threat to the revenue structure of traditional financial exchanges.

On the 5th (local time), crypto-focused media outlet Cointelegraph referenced a Galaxy Digital report and analyzed, "Robinhood's stock tokenization plan could directly impact the core revenue sources of established exchanges like the New York Stock Exchange (NYSE)—namely trading fees and sales of market data."

According to the report, Robinhood has recently announced plans to build the 'Robinhood Chain', compatible with the Ethereum blockchain. This is a layer-2 network based on Arbitrum Orbit, and allows users to trade on-chain 24/7 by issuing derivative tokens backed by real stocks.

The platform structure closely resembles that of Coinbase's Base, and Robinhood will directly operate the sequencer of this chain, thereby capturing all revenue from trading fees. Galaxy currently estimates that Base generates over $150,000 per day on average in sequencer revenue. A sequencer acts as a transaction coordinator on a layer-2 network, bundling multiple transactions and submitting them to the mainnet.

Galaxy assessed, "Robinhood's model could transfer concentrated liquidity and activity from traditional markets to blockchain, potentially weakening the competitiveness of legacy financial exchanges." The report also analyzed, "Tokenized stocks can provide functions not offered by traditional equities, such as serving as collateral in decentralized finance (DeFi) or automated dividends."

The media outlet added, "However, the 24/7 trading structure may bring additional volatility risks for retail investors, and regulatory uncertainty also persists," noting that "Robinhood's stock tokens are currently available only to users in the European Union (EU), and the U.S. Securities and Exchange Commission (SEC) has not issued an official position on this matter."