Robinhood Launches Blockchain Stock Tokens, Threatening NYSE Trading Volume

Robinhood Markets has introduced blockchain-based stock tokens, a development that analysts believe could divert trading volume and fee revenue from the New York Stock Exchange. On June 30, Robinhood launched tokens for over 200 U.S. stocks and ETFs for its European customers, including shares of prominent companies like Nvidia, Apple, and Microsoft. These commission-free tokens are currently tradable nearly around the clock, five days a week, with plans to enable full 24/7 trading once Robinhood's own "Robinhood Chain" goes live. This chain is an Ethereum-compatible Layer-2 on Arbitrum.

Galaxy Digital, in a July 5 research report, warned that this shift could drain the deep pools of liquidity on traditional venues. Robinhood’s token engine allows users to trade "real market" stocks as on-chain derivatives, bypassing regular exchange hours. This could potentially shift trading volume away from traditional exchanges like the NYSE, undermining their core revenues from trading fees and market data.

At a recent event, Robinhood's CEO Vlad Tenev detailed the company's plan. Robinhood has partnered with Arbitrum to issue tokens backed 1:1 by custodial shares at a U.S. broker-dealer. European users can buy or sell these tokens at the actual market price of the underlying stock, with trading beginning nearly 24/5 on Robinhood’s platform. By the end of the year, Robinhood aims to issue "thousands" of stock tokens and to expand trading fully 24/7. Under this design, actual stock ownership stays with the broker-dealer, and Robinhood mints or burns tokens on blockchains for each trade. Users can self-custody tokens or plug into DeFi, unlocking features like using shares as collateral or auto-dividends that traditional equities cannot provide.

Galaxy Digital's report argues that Robinhood’s token plan could directly challenge the deep concentration of liquidity on incumbent exchanges. By moving even a slice of trading off traditional venues, Robinhood could shift trading volume away from places like the NYSE and erode the exchanges’ activity and core revenue streams, which rely on trading fees and the sale of market data. Every stock transaction that occurs on Robinhood’s chain is one fewer trade (and fee) on a venue like NYSE Arca or Nasdaq. Galaxy notes that under Robinhood’s architecture, Robinhood itself would capture all trading fees. Because it controls the sequencer and holds the tokenized assets, Robinhood would collect every trading spread and fee on its network. By contrast, incumbent exchanges must share a portion of fees with regulators, market makers, and data distributors. The report points out that Coinbase’s Base rollup already nets roughly $150,000 per day in on-chain fees – revenue that goes straight to Coinbase. Robinhood’s model allows the company to monetize the full ‘tokenization stack’ from offchain trading to onchain utility.

This is significant because stock exchanges earn most of their profit from transaction fees and data. Intercontinental Exchange (ICE), which owns the NYSE, reported about $5.0 billion in net exchange revenue for 2024. Even a modest shift in volume could dent such figures. Galaxy emphasizes that if multiple brokerages adopt similar tokenization, the impact could be immense: traditional exchanges might be left "custodians of a less functional version of the same assets," the report warns.

Robinhood’s stock tokens are currently only available to European users. The U.S. Securities and Exchange Commission has so far not blessed this model. Indeed, the U.S. securities industry lobby has urged the SEC to bar tokens from trading outside the normal U.S. trading system. It remains unclear whether SEC approval will be required once Robinhood or others extend token trading to U.S. accounts. Robinhood’s CEO hinted the company will eventually launch its own blockchain and pursue 24/7 trading, but regulators have yet to sign off on that plan. Outside the U.S., the token push has already stirred publicity. Robinhood is even offering tokens for private-company shares, although OpenAI quickly noted those tokens are not actual equity in its company. Separately, other exchanges are watching closely: last month Kraken began offering U.S. stock tokens to non-U.S. users, and Coinbase is developing its own stock-perpetual-futures products.