The post Robinhood CEO Says GameStop Incident Was a Wake-Up Call for Tokenization appeared on BitcoinEthereumNews.com. In brief Robinhood CEO Vlad Tenev says tokenizationThe post Robinhood CEO Says GameStop Incident Was a Wake-Up Call for Tokenization appeared on BitcoinEthereumNews.com. In brief Robinhood CEO Vlad Tenev says tokenization

Robinhood CEO Says GameStop Incident Was a Wake-Up Call for Tokenization

4 min read

In brief

  • Robinhood CEO Vlad Tenev says tokenization could have prevented the 2021 GameStop trading halt, blaming outdated settlement infrastructure.
  • Experts say traditional brokerages handled similar surges, and Robinhood’s failure stemmed from inadequate capital reserves and risk management.
  • Recent SEC guidance states that tokenized assets still require the same collateral and settlement controls as traditional securities.

Five years after the GameStop trading frenzy rocked Wall Street, Robinhood CEO Vlad Tenev says the episode was a “wake-up call” that exposed deep flaws in U.S. market plumbing, and convinced him that tokenization may be the clearest path to preventing another such failure.

In a post on X, marking the January 2021 meme-stock crisis, Tenev said Robinhood and other brokerages were “forced to halt buying” of volatile stocks like GameStop due to clearinghouse deposit rules tied to the then-two-day settlement cycle. 

The result, he wrote, was “massive deposit requirements, trading restrictions, and millions of unhappy customers,” as outdated infrastructure collided with unprecedented retail trading volume.

The remarks revisit one of the most controversial moments in Robinhood’s history when, in late 2021, retail traders from Reddit’s r/WallStreetBets triggered a short squeeze in GameStop  stock (GME), sending its price from roughly $17 at the start of the year to an intraday high of $483.

Robinhood soon restricted purchases of GME and other meme stocks, triggering lawsuits, political backlash from lawmakers, and a high-profile House Financial Services Committee hearing, where Tenev apologized for the company’s handling of the crisis.

Tenev said Robinhood’s advocacy helped move U.S. stock settlement from T+2 to T+1, meaning trades now settle in one business day, but noted delays still stretch to T+3 or T+4 around weekends.

The remedy he advocates for is tokenization, which he says enables real-time settlement and freer trading, an approach Robinhood is already rolling out in Europe with plans for 24/7, DeFi-enabled stock tokens.

“It’s reasonable to say that clearing and settlement rules played a big role,” Robin Singh, CEO of crypto tax platform Koinly, told Decrypt. “While faster settlement could help reduce these stresses, tokenization doesn’t remove all market or regulatory challenges.”

But critics say the settlement bottleneck only partially explains what went wrong. While the T+2 clearing cycle amplified liquidity pressure during the surge, it did not affect all brokers equally, raising questions about whether Robinhood’s internal risk controls and capital planning were adequate for the scale of demand it faced.

Musheer Ahmed, founder and managing director of FinStep Asia, told Decrypt that traditional brokerages have previously handled similar surges in demand for stock without incident. 

“It is likely that Robinhood had not factored in capital reserves and risk management controls for such a high scale of interest,” he said.

“Irrespective of the scale and terms for collateral, the buck stops with the broker to be able to ensure smooth trading for their clients at all times,” Ahmed added. “If a firm is unable to keep up, then it is a lacuna that they need to work on and fix.”

Tokenization has been attracting growing interest, with top executives framing it as the next step in the financial evolution.

Tokenization of stocks can “potentially alleviate the collateral pressures,” Ahmed said,  if there are “appropriate smart contracts in place to source the collateral in real-time.”

Still, regulatory constraints loom as on Tuesday, SEC staff reiterated that tokenized securities remain subject to existing federal securities laws, meaning that blockchain format alone does not change an asset’s legal status.

“Without regulatory clarity, such efforts are moot,” Tenev wrote, saying collaboration with the SEC and CLARITY-driven tokenization standards could avoid another 2021-style shutdown.

Daily Debrief Newsletter

Start every day with the top news stories right now, plus original features, a podcast, videos and more.

Source: https://decrypt.co/356276/robinhood-ceo-gamestop-wake-up-call-tokenization

Disclaimer: The articles reposted on this site are sourced from public platforms and are provided for informational purposes only. They do not necessarily reflect the views of MEXC. All rights remain with the original authors. If you believe any content infringes on third-party rights, please contact service@support.mexc.com for removal. MEXC makes no guarantees regarding the accuracy, completeness, or timeliness of the content and is not responsible for any actions taken based on the information provided. The content does not constitute financial, legal, or other professional advice, nor should it be considered a recommendation or endorsement by MEXC.

You May Also Like

Trump roasts Mike Johnson for saying grace at prayer event: 'Excuse me, it's lunch!'

Trump roasts Mike Johnson for saying grace at prayer event: 'Excuse me, it's lunch!'

President Donald Trump in a speech at this year's National Prayer Breakfast roasted House Speaker Mike Johnson (R-LA) for saying grace at meals.The 79-year-old
Share
Rawstory2026/02/05 23:11
Where Can You Turn $1,000 Into $5,000 This Week? Experts Point Towards Remittix As The Best Option

Where Can You Turn $1,000 Into $5,000 This Week? Experts Point Towards Remittix As The Best Option

Cryptocurrency markets are again showing that opportunities can emerge when fundamentals, timing and demand intersect. Amid sideways price action in many major
Share
Techbullion2026/02/05 23:13
UK Looks to US to Adopt More Crypto-Friendly Approach

UK Looks to US to Adopt More Crypto-Friendly Approach

The post UK Looks to US to Adopt More Crypto-Friendly Approach appeared on BitcoinEthereumNews.com. The UK and US are reportedly preparing to deepen cooperation on digital assets, with Britain looking to copy the Trump administration’s crypto-friendly stance in a bid to boost innovation.  UK Chancellor Rachel Reeves and US Treasury Secretary Scott Bessent discussed on Tuesday how the two nations could strengthen their coordination on crypto, the Financial Times reported on Tuesday, citing people familiar with the matter.  The discussions also involved representatives from crypto companies, including Coinbase, Circle Internet Group and Ripple, with executives from the Bank of America, Barclays and Citi also attending, according to the report. The agreement was made “last-minute” after crypto advocacy groups urged the UK government on Thursday to adopt a more open stance toward the industry, claiming its cautious approach to the sector has left the country lagging in innovation and policy.  Source: Rachel Reeves Deal to include stablecoins, look to unlock adoption Any deal between the countries is likely to include stablecoins, the Financial Times reported, an area of crypto that US President Donald Trump made a policy priority and in which his family has significant business interests. The Financial Times reported on Monday that UK crypto advocacy groups also slammed the Bank of England’s proposal to limit individual stablecoin holdings to between 10,000 British pounds ($13,650) and 20,000 pounds ($27,300), claiming it would be difficult and expensive to implement. UK banks appear to have slowed adoption too, with around 40% of 2,000 recently surveyed crypto investors saying that their banks had either blocked or delayed a payment to a crypto provider.  Many of these actions have been linked to concerns over volatility, fraud and scams. The UK has made some progress on crypto regulation recently, proposing a framework in May that would see crypto exchanges, dealers, and agents treated similarly to traditional finance firms, with…
Share
BitcoinEthereumNews2025/09/18 02:21