A company has put pieces of OpenAI up for sale in Europe. What is tokenization of shares?

There's a new phenomenon brewing in the middle ground between finance and cryptocurrencies. It has the potential to change the stock markets as we know them.

Robinhood, a stock and cryptocurrency trading platform—perhaps the most well-known in the world and the driving force behind the 'meme stock' phenomenon in 2021—has just announced the launch of a new line of "tokenized stocks."

A digital version of securities. Among these are those of OpenAI and SpaceX, immediately available to European users thanks to more flexible rules for the sector introduced by MiCa, the EU regulation designed to regulate digital assets.

OpenAI's protests: they're not real actions, they don't give any rights

But the launch wasn't greeted with enthusiasm by everyone. Indeed, OpenAI immediately distanced itself, publicly stating that the tokens "are not OpenAI shares" and that the company "has not authorized any such transaction."

This is just the latest sign that the tokenization of financial assets is becoming a central theme in the markets, but also a growing source of tension between technology and regulation, accessibility and transparency, promise and reality. This is especially true because neither OpenAi nor SpaceX are listed.

What does it mean to make a company's shares 'tradable tokens 24/7'?

Tokenization is the process by which a traditional asset—such as a stock share—is digitally represented on a blockchain via a token. The stated goal is to make these assets more easily tradable: 24/7, on decentralized platforms, bypassing traditional exchanges.

In the case of Robinhood, these tokens were made available through a special purpose vehicle that actually owns the shares, while users purchase an indirect “share” through the token.

The system allows small investors to access private stocks (such as OpenAI or SpaceX) that would normally be out of reach, especially because they aren't listed on the stock exchange. It thus provides them with indirect exposure, thanks to the creation of a special purpose vehicle that actually purchases OpenAI or SpaceX shares on the private secondary market.

Despite the legal structure designed by Robinhood, OpenAI has denied any involvement. Indeed, it discourages users from purchasing these tokens: "We do not approve of the initiative," it said. The company then clarified that any equity transfer requires its formal approval, and urged users to exercise caution.

Opportunity or financial Wild West? Siano (21Shares): "It can bring benefits, but there are risks."

In short, as much as these tokens may look like shares, they aren't. And those who purchase them don't actually obtain any real rights over the company. Tokens as an opportunity—or just synthetic instruments? Massimo Siano, Head of Southern Europe for 21Shares, observes that tokenization, if properly regulated, could bring significant benefits to the stock market: greater accessibility, seamless trading, reduced costs, operational efficiency thanks to smart contracts, and even new use cases in decentralized finance (DeFi).

Tokenization could bring numerous benefits to the global stock market. The first are temporal and accessibility-related, with platforms enabling European users to trade US stocks 24/7, 5 days a day, or even 7 days a week. This could also trigger a process of redistribution of liquidity from centralized exchanges (such as the NYSE) to other decentralized peers.

But he also recognizes the risks: "While a tokenized stock can be traded 24/7, its non-tokenized version will still be bound by the constraints of traditional finance, such as the opening hours of stock exchanges or other platforms. This could lead to a disconnect between the digital and the 'real' worlds, especially if a major news story is announced during closing hours. In this case, retail investors trading with tokens could act prematurely or misprice the asset, for example, because they've only looked at the price of the tokens. This would create volatility, price swings at market openings, and increased arbitrage opportunities. While these are opportunities, they also pose risks, especially for less experienced investors who interpret the token price as a 1:1 replication of the real asset's performance," Siano argues.

Why can Robinhood sell this product in Europe?

What does the law say? Robinhood has been able to offer these tools in Europe by taking advantage of more flexible rules such as those introduced by the MiCA regulation. In the United States, however, the SEC has stricter rules and currently prohibits access to these products for American users. However, things are moving in the US as well.

The SEC itself is evaluating new legal forms to integrate tokenized assets into the financial system. The question remains: are these innovative instruments or simply unregulated derivatives? Siano emphasizes that clear rules are needed on three fronts: "We at 21Shares expect the most significant measures to be adopted: the dissemination of key information and investor protection (for example, specifying the rights and limitations of those holding tokenized assets); the definition of regulation, custody, and transferability of assets in accordance with applicable laws; and the monitoring of market integrity and the existence of fair pricing mechanisms. In this regard, Europe could represent an initial test of how tokenized assets can be integrated into traditional financial systems. For Robinhood, the goal is to "expand access" to private markets.

With this move, the company says it wants to democratize finance, a phrase directly echoed by its corporate motto. Despite the controversy, the news has boosted Robinhood stock, which has reached a new all-time high. But the OpenAI case highlights a point that's hard to ignore: without transparency, these tools risk being misunderstood, if not becoming dangerous. Tokens are not shares. And until rights, obligations, and guarantees are clarified, the promises of tokenization risk turning into a new form of opacity.

Siano: "Altman raises important questions; tokens don't confer rights."

Hence the criticism from Sam Altman and OpenAI, which Siano comments as follows: "The criticism raises important questions about the nature of tokenized assets. These tokens often don't provide investors with rights such as the ability to vote, participate in company governance, or file complaints under company regulations. Furthermore, trading transactions involving them aren't reflected in the company's capital or records; this means that the tokens are an entirely separate asset from the stock they refer to."

But at the same time, "this raises some considerations for investors: as the tokenized asset market grows, it's crucial to pay close attention and carefully verify whether these instruments are actually backed by the underlying asset or not. Indeed, without formal authorization from the company that issued the stock, a token behaves more like a synthetic product or derivative, which doesn't grant any real ownership."