Web3 Expert Analysis: The Innovation and Controversy of the Robinhood Stock Token Project

Recently, a well-known internet brokerage announced the launch of "stock tokens" linked to the equity of several top private companies for European users, bringing the cutting-edge topic of tokenizing real-world assets (RWA) to the forefront once again. However, one of the private companies quickly issued an official statement, clearly stating that it has no association with the tokens issued by the brokerage and warned that "these tokens do not represent the company's true equity."

This event not only reveals the profound contradictions between financial innovation and traditional equity management, but also provides a thought-provoking case for global regulators and market participants. This article will deeply analyze the impact and significance of this case.

1. Event Background

1. Issuer Introduction

This internet brokerage is a financial services company based in the United States, headquartered in California. The company mainly provides retail investors with a stock trading app and website, known for zero-commission trading. Its services include stock, options, ETF, and cryptocurrency trading.

The company has established its European center in Lithuania and has obtained a financial brokerage license and a cryptocurrency service provider license issued by the local central bank, allowing it to provide related services in the European Economic Area.

2. Event Overview

The broker announced at the European Crypto Finance Summit the launch of "stock token" products for EU users, allowing investors to trade over 200 US stocks and ETFs in token form around the clock. The most notable is the tokenization of stocks of unlisted companies, and part of the tokens will be airdropped to EU users as a reward.

However, one of the unlisted companies immediately issued a statement indicating that these tokens do not represent company equity, that the company has not collaborated with the brokerage, nor endorsed it, and emphasized that any transfer of equity must be approved by the company.

2. Operation Mode Analysis

1. The essence of the Token

These "stock tokens" are essentially tokenized contracts on the blockchain that are linked to the shares held by the issuer in the special purpose entity (SPV). The issuer links the token price to the value of the target company's shares in the SPV by holding shares of the SPV that control a certain number of shares in the target company.

Therefore, the underlying asset of the token is the issuer's shareholding in the SPV company they established. When users purchase tokens, they are not buying actual shares of the target company, but rather a contract that follows its price and is recorded on the blockchain. There are two layers of separation between the token holders and the actual equity, and the token price will fluctuate with the changes in the value of the shares in the SPV.

2. Consistency between the issuer and the target company's statements

From the operational model described above, it can be seen that the statements of the issuer and the target company are not contradictory. The target company denies that the Token is its equity and has not authorized any equity-related products. The issuer also admits that the Token is not a true equity but merely provides investors with an indirect exposure opportunity through SPV shareholding. The disagreement between the two parties lies in whether this indirect linkage is compliant, rather than in the description of the operational mechanism.

3. Motivation Analysis

The issuer has launched this type of Token product in an attempt to address several pain points in the current investment market:

• The participation in high-quality unlisted company equity is low.
• Traditional private equity investment has a high threshold
• The demand for innovative assets has surged among investors.

Through tokenized trading, the issuer aims to provide retail investors with a new investment channel based on market consensus. By selecting well-known technology companies as targets, it can leverage their brand effect to attract investor attention.

4. Regulatory Status

The product is currently mainly regulated by the Bank of Lithuania and the EU. The Bank of Lithuania has initiated an investigation, requesting relevant details to assess compliance. The Token is issued as a derivative under the MiFID II framework and may need to comply with ESMA regulations as trading volume increases. If it enters the US market, it may also be subject to SEC regulation.

3. Analysis of Benefits and Risks for All Parties

1. Investors

Yield:

• Gain access to investment opportunities in unlisted companies
• Can profit from the valuation growth of the target company

Risk:

• Does not enjoy true shareholder rights
• Token prices may not accurately reflect the company's value.
• The valuation of unlisted companies is highly volatile.

2. Issuer

Revenue:

• Stock price rises, market value increases
• Expand market share, broaden customer base

Risk:

• The decline in the target company's valuation affects the Token price and reputation.
• Insufficient fulfillment capability may harm the interests of investors

4. Differences from Traditional RWA Projects

• Underlying assets: unlisted company equity vs physical assets
• Issuer: Traditional financial institutions vs Blockchain project parties
• Regulatory Environment: Relatively Clear vs Not Clear Enough
• Investor Rights: Indirect Economic Exposure vs Representation of Ownership
• Liquidity: High vs Low
• Price discovery: reliance on issuer valuation vs market pricing

5. Expert Opinions

1. This event has received a strong response, mainly because the issuer is a traditional financial institution and the underlying asset is a well-known technology company.

2. For other holding institutions, unilateral tokenization operations may encroach on common interests and be difficult to obtain cooperation.

3. If tokenized exits become the norm, it may exacerbate stock price fluctuations and increase speculation.

4. The borderless characteristics of tokens conflict with the geographical restrictions of listing rules.

5. There are legal disputes over Token operations, such as issues of splitting, regulation, etc., which may harm shareholder interests.

6. The exploration of Web3 innovation has certain positive significance, but it has a considerable impact on traditional finance.

7. Investors and institutions considering trying should be cautious and weigh the pros and cons.