Why Robinhood's tokenisation push threatens to upend ETFs, traditional stock exchanges

The tokenised future of finance is making waves on Wall Street as an emerging sharemarket triumvirate of Circle (NYSE: CRCL), Robinhood (NASDAQ: HOOD) and Coinbase (NASDAQ: COIN) surge on excitement over the sector's disruptive potential. 

On Monday, shares in retail trading pioneer Robinhood jumped 12% after it said it will offer European app users the ability to trade US stocks and exchange traded funds (ETFs) on a tokenised basis across a blockchain. 

“Our latest offerings lay the groundwork for crypto to become the backbone of the global financial system,” claimed chief executive Vlad Tenev.

The more than 200 stock and ETF tokens will settle instantly on the Abritrum blockchain, although Robinhood plans to build its own layer 2 blockchain to settle tokenised assets 24/7 in the future. 

More than hot air?

The news is potentially significant for investors as tokenised stock trading from an app like Robinhood that has 25.9 million users could eventually threaten to take market share from traditional stock exchanges. 

This means the likes of the Australian Stock Exchange (ASX: ASX) and London Stock Exchange may face pressure in the future. 

The fact that Robinhood intends to tokenise ETFs is also arguably significant as it threatens to additionally disrupt the ETF industry as one of the fastest growing industry's in traditional finance. 

In theory any asset for which there are market clearing prices in real time can be tokenised as long as computers can communicate in real time to verify the creditworthiness of the buyer and seller to enable private settlement. 

One solution for ETF providers is to tokenise their own ETFs that would transmute into something closer to Tokenised Traded Funds (TTFs) as they would not be traded via an exchange at all. 

Robinhood is on fire

For now, Robinhood claims it can offer tokenised stock trading for zero commission and fees to European investors, with just a 0.1% spread on the foreign exchange. It also says stock token holders will receive any dividend payments directly into their Robinhood app account. 

Robinhood posted a net profit up 114% to $US336 million in the first quarter of 2025 and boasts $US255 billion in assets across its platform. The company's progress in tokenisation and promoting crypto services has seen shares surge 311% over the past year to $US93.63. 

Despite the potential it's worth noting the decentralised finance and crypto industry is constantly pushing the envelope with the regulators of traditional finance and the moves to tokenise from the likes of Robinhood will face significant obstacles. 

Shares in stablecoin IPO Circle have also gone absolutely gangbusters on Wall Street to surge 500% since it floated just three weeks ago. While Coinbase stock is up 50% over the past year as it pushes into tokenisation and crypto. 

It's probably not a stretch then to expect the ETF industry to soon launch tokenised type exchange traded funds as an investment theme. Watch this space and I'd keep an eye on the price action around the likes of Robinhood, Circle, and Coinbase as I would not be surprised if more hot money flows in over time.