In a post on X recalling the January 2021 trading freeze, Tenev said the turmoil was driven less by misconduct than by structural limitations in the financial system, according to Coindesk. He argued that slow settlement processes combined with extreme trading volume created a chain reaction that led to soaring collateral requirements, trading limits and widespread customer frustration.
Robinhood and other brokerages halted purchases of several highly volatile stocks, including GameStop, amid surging retail trading and elevated clearinghouse collateral demands in January 2021. That episode exposed how traditional market infrastructure and settlement processes can strain under extreme volatility and contribute to trading interruptions that frustrate investors.
Robinhood’s CEO has blamed the buying halt on outdated settlement mechanics and excessive regulatory costs tied to the legacy clearing system. The 2021 interruption sparked widespread criticism and regulatory scrutiny, and it remains a defining moment in the debate over market resilience and fairness.
Tenev’s latest comments position tokenized stocks, digital representations of equity on a blockchain as a potential solution to these structural issues. Tokenization can enable faster settlement, 24/7 trading, and greater transparency by leveraging distributed ledger technology to streamline the transfer of ownership without traditional intermediaries.
Robinhood has already experimented with tokenized equities and ETFs in the European Union, allowing eligible users to buy and trade blockchain-based stock representations. While these tokens do not equate to direct equity ownership in every case, they signal a push by the firm to extend blockchain applications into mainstream financial markets.
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Tokenized assets could help reduce dependence on legacy settlement cycles, which now take multiple days and can trigger large collateral calls during turbulent periods. By contrast, tokenized markets are designed for continuous trading and settlement, potentially smoothing out volatility spikes that have historically led to disruptions.
Despite the enthusiasm, tokenized stocks remain controversial. Critics note that tokenized offerings may not represent actual equity, and regulators are still grappling with how to classify and supervise these instruments.
Robinhood is also in discussions with regulators about its tokenized equity plans, according to Bloomberg News.
