What Are Stock Tokens And How To Trade Them? Robinhood's New Offering Merges Owning Stocks With Blockchain Tech: Here's How It Works

Robinhood Markets Inc. HOOD has launched Stock Tokens, a groundbreaking offering that blends traditional stock market investing with blockchain technology, now available to European Union customers.

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What Are Stock Tokens?

These tokens, derivatives tracked on the blockchain, mirror the prices of over 200 U.S. stocks and ETFs, including giants like Nvidia Corp. NVDA, Apple Inc. AAPL, and Microsoft Corp. MSFT, providing exposure to the U.S. market without owning the actual stocks.

How And When Can EU Users Trade Stock Tokens?

To trade, users must sign up, provide a tax identification number, complete a knowledge check, and agree to the terms.

Stock Tokens are accessible via the Explore tab on Robinhood's app, where users can search by ticker or name, place buy or sell orders in quantities or EUR values, and review orders on the Stock Token Detail Page.

Funds from sales are available for trading instantly but require a one-business-day hold for withdrawals.

What Are The Charges To Trade Stock Tokens?

Stock Tokens are traded in USD but automatically converted from euros with a minimal 0.10% FX fee, ensuring no hidden costs or commissions. Investors can start with just €1, trade 24/5 from Monday 2 a.m. CET/CEST to Saturday 2 a.m. CET/CEST, and even earn dividends when eligible.

The tokens, issued via Arbitrum and soon Robinhood's own Layer 2 blockchain, are held securely by a U.S.-licensed institution under MiFID II regulations.

How Do Corporate Actions Affect Stock Tokens?

Corporate actions like stock splits, mergers, or dividends affect tokens, with Robinhood handling adjustments automatically. Trading may pause during such events, with notifications via banners or pop-ups.

While offering flexibility and low costs, Stock Tokens carry risks, including potential capital loss, requiring users to assess their risk tolerance during onboarding.

Can Investors Trade Private Companies Via Stock Tokens?

Robinhood's initiative, including tokenized private company shares like OpenAI and SpaceX, aims to democratize finance, leveraging blockchain for transparency and accessibility. With plans to expand to thousands of tokens by year-end, Robinhood is poised to reshape global investing

Price Action: HOOD shares were up 3.12% in after-hours on Monday after ending 12.77% higher at $93.63 apiece. It has risen by 137.40% on a year-to-date basis and 310.84% over the past year.

Benzinga Edge Stock Rankings shows that HOOD had a stronger price trend over the short, medium, and long term. Its momentum ranking was solid; however, its value ranking was poor at the 10.90th percentile. The details of other metrics are available here.

The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, ended higher on Monday. The SPY was up 0.48% at $617.85, while the QQQ advanced 0.65% to $551.64, according to Benzinga Pro data.

After hitting fresh records on Friday and Monday, the futures of the S&P 500, Nasdaq 100, and Dow Jones indices were trading lower on Tuesday.

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