Robinhood under investigation in the EU: Stock Tokens at risk

Robinhood is in the spotlight after the controversial introduction of its Stock Tokens, financial assets that have sparked strong reactions among regulators, tech giants like OpenAI and SpaceX, and the entire investment landscape in the cryptocurrency sector. 

The rapid response of the European authorities to their issuance highlights the complexity of the crypto market applied to unlisted shares, raising issues of legitimacy, transparency, and financial democratization.

The Robinhood Stock Tokens Case and the Reaction of European Regulators

The launch of the Stock Tokens product by Robinhood, available from June 30 for European users, marked a turning point in the world of tokenized assets on blockchain. However, this initiative has not gone unnoticed by the European regulators. In particular, the Bank of Lithuania has initiated an investigation to verify the legal compliance of these digital instruments following the alarm raised by OpenAI.

The Baltic central bank stated: 

“We have contacted Robinhood and are awaiting clarification on the structure of OpenAI and SpaceX stock tokens and on communication to consumers.”

This intervention marks the start of a phase of comprehensive control over the new instruments linked to crypto and the European private market, which risk finding themselves in a regulatory gray area.

The positions of OpenAI and SpaceX: no partnership, no involvement

To intensify the controversy was the clear stance taken by OpenAI. On July 1st, the company clarified: 

“We do not have partnerships, we are not involved, and we do not endorse this. Any transfer of OpenAI shares requires our approval, which has not been given.”

Questi “OpenAI tokens” non sono azioni di OpenAI. Non abbiamo collaborato con Robinhood, non siamo stati coinvolti in questo e non lo approviamo. Qualsiasi trasferimento di azioni di OpenAI richiede la nostra approvazione—non abbiamo approvato alcun trasferimento.

Per favore, fate attenzione.

— OpenAI Newsroom (@OpenAINewsroom) 2 luglio 2025

Even Elon Musk, former co-founder of OpenAI and CEO of SpaceX, denied any form of connection, calling the tokenized stock “fake equity”.

These statements deny any official connection between Robinhood and the companies represented by the tokens, implying that the product offered does not confer any real rights over the companies themselves.

Functioning and characteristics of Robinhood Stock Tokens

The Stock Tokens of Robinhood are structured as simple price-tracked contracts, issued on the Ethereum blockchain through the Arbitrum network. They are not real stocks, but digital representations that replicate the value of stocks on the private market, without assigning voting rights or legal ownership to investors.

These tokens are available only for users of the European Union and, at least initially, the launch led to a historic growth of Robinhood’s stock on NASDAQ, with a surge of 13% and values temporarily exceeding 100 dollars. However, the frenzy lasted little: the price of HOOD shares has currently returned to 92.96 dollars, with a decline of 1.45%.

Structural limits: garden walled and liquidity restrictions

A critical aspect of the design of Stock Tokens concerns the so-called “garden walled” nature. The tokens can only be transferred between approved wallets, registered with the KYC/AML (Know Your Customer/Anti-Money Laundering) procedure. This restrictive structure, while offering some protections and contributing to transparency, significantly reduces the interoperability of the tokens with DeFi protocols, decreasing their potential liquidity in the broader crypto market.

Criticism and risks: transparency, lack of rights, and legal issues

Regulatory bodies and market observers have expressed concerns both about the legitimacy of the product and the possibility of misleading investors. Kurt Watkins of Watkins Legal emphasized that in the United States, such instruments would be “likely blocked by the SEC” due to the opaque structure of the corporate vehicles used, which risk concealing risks and providing less protection to investors.

The main issues highlighted revolve around:

• Non-equity nature: the tokens do not grant any ownership or voting rights.
• High centralization: the management and transfers of tokens are essentially under the full control of Robinhood.
• Scarsa liquidità: transfers and the exchange of tokens are limited to approved wallets, excluding more decentralized networks.
• Transparency: the risk of misunderstandings regarding the actual ownership of shares linked to the tokens.

Ren from Electric Capital commented that the Robinhood model “will probably surpass traditional DeFi in terms of control, but not in openness and interoperability,” precisely because each transfer requires additional verification on approved wallets and there are no direct steps between unknown users as in public blockchains.

Potential: democratization of access or illusion?

Despite the harsh criticism, several investors see Robinhood’s move as an attempt to democratize access to private markets, typically reserved for large investors or venture capital firms. Amit Kukreja summarized it: “Robinhood has simply created a token that mirrors the value of OpenAI in the private market.”

The comparison between innovation and risk thus remains heated. On one hand, the masses are given the opportunity to bet on traditionally inaccessible assets, while on the other hand, there are risks of misunderstanding, lack of protections, and reduced liquidity.

The debate on regulation and the future prospects of Stock Tokens

The public position of Robinhood remains firm: the tokens would be a compliant and secure product, designed to provide regulated and tracked access to investments in the private market. However, the Bank of Lithuania has expressed the intention to thoroughly assess the compliance of these instruments with EU regulations, suggesting that the outcome of the matter will be determined by the authorities’ verdict.

The market is therefore waiting to understand if the Stock Tokens will truly represent the beginning of a new phase of access to private capital, or if they will be limited – or even banned – by more rigorous and defined regulation.

Towards a new balance between financial innovation and investor protection

The initiative of Robinhood’s Stock Tokens highlights the tension between the innovative momentum of the digital economy and the need for security for investors. The confrontation with authorities and corporate leaders like OpenAI and SpaceX has shed light on the legal gray areas, stimulating a fundamental debate for the future of tokenization.

In the scenarios that are unfolding, it will be crucial to monitor how the European regulatory framework will evolve and if other platforms will follow the path of tokenizzazione degli asset privati. For potential investors, thoroughly informing themselves about the risks, limits, and advantages of such instruments remains the only guarantee of conscious participation in this new phase of the bull and bear financial markets.