In the U.S. the Fourth of July week typically coincides with a dearth of commercial activity. For many, it’s the hallmark of the start of summer, and as such, most people (rightfully) retreat to the beaches, campgrounds, oceans and lakes. A mass exodus from the office as it were. For others, it’s a week that grinds on the soul, trying to remain productive while fighting off the ennui emanating from the lack of action and people. That was me, at least until the following occurred.
With CNBC running on my office monitor, a dapperly dressed gentleman, decked out in a slick seersucker sports jacket with immaculately groomed Van Dyke facial hair caught my attention. It was Vlad Tenev, CEO of Robinhood being interviewed, ostensibly being congratulated for his digital trading platform’s stock price hitting an all-time high. Beyond the adulation though, CNBC’s Kelly Evans competently explored the drivers of the stock’s ATH, specifically a few innovative new products being brought to Robinhood’s exchange. This back-and-forth between reporter and CEO elicited a quote from the same, that to this author, rang true of a thesis he’s been promulgating for years: in the world of crypto and digital aasets, the economic value is not instantiated in Bitcoin nor meme coins, the economic and productive value (most of it anyway) flows from the underlying blockchain/ distributed ledger technology. The coins are the bright, shiny objects, blockchain is the wellspring of utility, and thus the source of value.
Tenev’s quote was as elegant as it was profound: “It’s time to move past bitcoin and meme coins into real world assets.” Quite a statement from the head of one of the world’s most crypto-forward trading platforms. I could just but imagine Tenev’s Wall Street cohort’s – Michael Saylor (MSTR) and Anthony Pompliano (CCCM) – contorted, apoplectic faces when they saw the headline. A betrayal, perhaps. But hyperbole? Not even close.
Within the realms of wealth management and capital markets technology, blockchain is revolutionizing the way we think about and precipitate the exchange of value through the tokenization of real world assets on private, permission-based distributed systems. Robinhood’s new products – allowing fractionalized, cryptographically tokenized securities (bonds, equities [both public and private], real estate) to trade on distributed ledgers – may be one of blockchain’s greatest coups to date. Note:Though as of late, the tokenization of another RWA asset, i.e. USD (expanded definition of RWA) via stablecoins is also very much in the hunt.
It was only a few days after Tenev’s interview that one of crypto’s highest profile investment funds, Pantera Capital, along with Ondo Finance, followed suit and announced the allocation of $250M to invest in similar RWA initiatives.
Conclusion.
It’s obvious to this author that we’re approaching (or already at) an inflection point in the rise of distributed ledger tech, witnessing the separation between winning and losing blockchain applications, largely as a function of utility. Good on Robinhood and Tenev for having the vision to bring both private and publicly traded equities to the marketplace for all investors. Fractionalization. Democratization. Tokenization. And a new high speed, high security, semi-decentralized protocol to transfer ownership of real world assets and securities, and settle the same – this is the power of blockchain technology in finance.
One final (and very important) comment.
For the benefit of all stakeholders in the digital asset community from bankers to investors, payments companies to exchanges, it should not be lost that Robinhood’s new product launch is available only in the EU and the European Economic Area (for now), though the European launch has accelerated talks with the SEC regarding launching the same in the U.S.
Why is this and why is it so important?
Because the EU and EEA operate under the Markets in Crypto-Asset (MiCA) regulations. The point is this: where there exist regulatory guardrails, there exists innovation. Though the U.S. is making headway with stablecoin regulation via the Senate’s GENIUS Act and the House’s STABLE Act, in truth there hasn’t been much positive movement for digital asset regulation en masse. And despite the current administration’s bullish statements about the asset class and technology writ large, its words have not been commensurate with meaningful change.The establishment of a national cryptocurrency reserve was simply a sop to the high-profile, monied crypto constituencies the administration courted in the election.