Prediction: Robinhood Will Launch Tokenized Stock Trading in the U.S. Before the End of 2027

The Securities and Exchange Commission just handed Robinhood Markets (NASDAQ:HOOD) something its CEO has campaigned for since the start of 2025. On Sept. 17, the agency issued what it calls an "Innovation Exemption," an order that lets qualifying venues trade tokenized versions of U.S. stocks for five years without registering as stock exchanges. Robinhood shares climbed 5% that day, and, as of this writing, the growth stock trades at about $120.

However, the order only covers tokens that give holders the same rights as the real shares. The stock tokens Robinhood sells overseas today don't -- the company's own product disclosures refer to its European tokens as "derivative contracts" that track stock prices "without granting rights to them."

Can Robinhood build a version that qualifies, and have it trading in the U.S. before the end of 2027? I think it can.

Image source: The Motley Fool.

Five years, with conditions

The order lets what the SEC calls tokenized securities venues match buyers and sellers of tokenized U.S. stocks with the automated liquidity pools widely used in crypto markets. The relief is temporary, and the SEC says it will consider additional changes in the meantime.

The conditions are the interesting part. A venue has to verify every token it lists carries the same rights and privileges as the conventional shares -- dividends and votes included. A company also gets written notice and a chance to object before a venue starts trading a version of its stock tokenized by a third party.

And trading starts small by design: the order caps symbols and volume, and a venue must publish its plans publicly at least 30 days before launching.

Robinhood's existing tokens wouldn't qualify

Robinhood launched its stock tokens in Europe in mid-2025 and has since expanded them to more than 120 countries. The more recent versions, structured as debt securities, trade around the clock on the tech company's own blockchain network. And they are not available to U.S. customers.

But they're not stock. Holders can earn the equivalent of dividends when eligible, but they do not own the underlying shares and cannot vote them. The SEC's definition of tokenized stock excludes exactly that structure -- tokens that offer only "synthetic exposure" to a security.

The company saw this coming. On Sept. 14, three days before the order, CEO Vlad Tenev replied to criticism that token holders lack shareholder rights.

"In-kind redemption and voting are coming for Robinhood Stock Tokens," Tenev said in a post on X.

Redemption for actual shares and voting rights would likely close most of the gap between what Robinhood sells overseas and what a U.S. venue could list. I doubt the timing is coincidental.

Can it get there by the end of 2027?

The pieces are mostly in place. Robinhood Chain, the blockchain network the tokens trade on, launched its public mainnet in July. What was lacking was permission in the U.S., and the SEC just supplied it.

Johann Kerbrat, who runs Robinhood's crypto business, called the exemption "a signal that tokenization is ready to come to the United States."

He did not offer a date. But Robinhood has scaled a new product rapidly before. Event contracts, a business that barely existed for the company two years ago, produced $156 million of second-quarter revenue, up more than tenfold year over year.

The prize is the stock-trading business itself. Equities transaction revenue jumped 95% year over year in the second quarter, to $129 million, accelerating from 46% growth in Q1. Robinhood's total revenue, for comparison, increased 32% year over year in the quarter, to $1.31 billion, and net income grew even faster, up 48%. Tokenized trading could extend exactly that line to weekends and, if the overseas product is a guide, new uses like collateral. Robinhood wouldn't need new customers, just more hours and more ways for the ones it already has to trade.

Of course, the rebuild is a big task. A token that carries full shareholder rights is a different instrument from a derivative contract, and Robinhood would still need to build or join a qualifying venue, clear the notice periods, and live within the volume caps. That could take most of the time between now and the end of 2027.

Ultimately, I expect Robinhood to have tokenized U.S. stock trading live before the end of 2027. It is a prediction about the product, not the stock. Shares now cost about 41 times the earnings analysts expect for 2027, a level that arguably prices in years of strong growth, and I see the stock as a hold here.

But the primary obstacle has always been regulatory, and that is the one that moved last week. The difficult part left is building the product, and Robinhood is not starting from scratch.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.