Hmmmm.

Click to find out what Frayer means, and read on to see what our old friends at Robinhood are cooking up….

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It’s no surprise that the GENIUS BILL enjoys widespread support in the crypto sector. Its eventual passage comes on the heels of a $100 million crypto industry lobbying effort. Corey Frayer says that “the purpose of the bill is to give them the veil of regulation."

There are few financial services companies that love a thin veil of regulation more than Robinhood. Behold, the newest attraction in their casino of financial products. 

On June 30th, Robinhood launched a new set of tokenized equities that it says will create wider global access to U.S. markets. To make its point, the electronic trading platform freely distributed freshly-minted SpaceX and OpenAI tokens to EU customers who signed up for its new tokenized stock trading platform. 

Nobody was more surprised by the news than SpaceX and OpenAI.

OpenAI responded to the tokenization by writing, “We did not partner with Robinhood, were not involved in this, and do not endorse it. Any transfer of OpenAI equity requires our approval—we did not approve any transfer.”

Based on the accuracy of the statement above, we assume it was not composed by ChatGPT. 

SpaceX CEO Elon Musk was equally supportive of Robinhood’s move. He simply tweeted, “your ‘equity’ is fake”.

Robinhood took the criticism in stride, promising to issue thousands of additional tokenized equities by the end of the year. And customers responded by lining up to pull the slot machine lever, sending shares on Robinhood up by 13% on the day of the announcement. 

Given the hazy legal status of this new financial product, it’s hard to see what Robinhood’s true motivation is here. 

Even at a time when the SEC is broadly supportive of the crypto industry, Robinhood’s novel tokenization has not gone unnoticed by regulators. SEC Commissioner Hester Peirce issued a statement shortly after Robinhood’s announcement aimed at bringing clarity to the matter. 

While Peirce acknowledged that the tokenization of securities is opening new pathways to investment and capital formation, she also cautions that the same basic market rules still apply.

In short, the Commissioner says that tokens are “enchanting, but not magical.”

Tokenization doesn’t transform the nature of underlying security, and it doesn’t create value where there is none to begin with.

To the point, if an issuer tokenizes their own security, the holder of that token enjoys a clear 1 to 1 ownership over this security. 

Totally. But what does it mean when a third party (like Robinhood, for example), issues those tokens. 

Commissioner Peirce explains that “an unaffiliated third party with custody of securities issued by another entity might, for instance, issue a new tokenized security tied to the securities it holds or may tokenize the “security entitlements” that investors hold against the custodian. Purchasers of these third-party tokens may face unique risks, such as counterparty risks.”

In other words, you don’t know what you’re buying or who you’re buying it from.

Paul Conn, President of Global Capital Markets at Computershare, observed in a recent LinkedIn post that “The issues regarding what is and what isn’t a US ‘security’ can be complex. The facts concerning who issued the token shouldn’t be.”

Robinhood’s actions threaten to compromise matters significantly, creating a bifurcated token marketplace, made up of those who own real issuer-tokenized equities and those who hold unauthorized third-party tokenized equities.

The former investors are custodians of tokenized shares. The latter are basically holding a betting slip for an invisible horse race. 

Naturally, this makes investors in unauthorized tokens extremely vulnerable to fraud. 

Commissioner Peirce urges investors to proceed with caution. She also welcomes would-be token issuers in search of guidance. “We stand ready to work with market participants to craft appropriate exemptions and modernize rules,” she concluded.

Most crypto industry advocates would agree that this is a step forward from the prior Commission’s approach to crypto regulation. A common grievance against the SEC under Chair Gensler was its preference for enforcement action over guidance. 

While the current regulatory environment leaves more than a few questions unanswered, there has been movement toward a more formal regulatory framework. We consider this, at the very least, a move in the right direction. 

But to be sure, we still have a long and winding road ahead before we achieve a framework that  is clear, fair, and consistent. But we’re here for it because, as the old saying goes…

For a deeper dive on the actual value of having a well-regulated, on-exchange tokenization trade, check out our recent chat with groundbreaking Green Impact Exchange (GIX).

As we closed in on the weekend, the S&P 500 verged on a new record high for the 5th consecutive day. Liz Ann Sonders, chief investment strategist at Charles Schwab, says that she sees “retail investor fingerprints” all over this surge. 

Yeah, well…we also left a ton of evidence at the scene of the crime. Sonders says that much of this surge has been driven by "aggressively risk-on positions”--that is, heavily shorted stocks and unprofitable tech stocks.  These trends, she says, have all the hallmarks of a market driven by us common folk. 

That may be true …at least in part - but there’s definitely more to this story and it might surprise you..

And if you’re looking strictly at anecdotal evidence that risk-oriented retail investors are propelling this rocket ship, it seems like Sonders has a point. 

Consider Kohls (KSS.N). On Tuesday, the struggling department store chain was the most actively traded stock across retail platforms–opening the day up roughly 100% and striking a 10-month high of $21.23.

The retailer’s utterly meme-stockish volatility eventually triggered a trading halt from the New York Stock Exchange. 

By the end of the trading day, the price had cooled. At the time of writing, it sits at just under $13 a share. 

This follows the same pattern we saw earlier in the week, with Redditors driving the stock for beleaguered home-selling platform Opendoor up 42% on Monday. On Tuesday, Opendoor fell back to earth as investors turned their attention to Kohl’s. 

By the end of the trading week, Opendoor had lost more than half of its gains. Some analysts see shades of 2021.

But to believe that this is just another Reddit-fueled meme stock rally, you’d have to ignore the evidence of something much bigger. 

Namely, that retail investors have shown more enthusiasm than ever for blue chips, large cap stocks and stable Exchange Traded Funds (ETF). In a note to clients this month, J.P. Morgan estimated that everyday investors have thrown $270 billion into the U.S. equity markets since January. 

And where did most of that money go? Well, it wasn’t Kohl’s.  

Everyday investors dropped $19.3 billion into the pot for NVIDIA and $11.9 billion into Tesla. The SPDR S&P 500 ETF Trust (SPY) saw $6.3 billion in inflows. In other words, this isn’t all dumb money, and we aren’t just gambling. This is evidence of the sustained and growing engagement of retail investors. 

And we’re probably not done setting records just yet. J.P. Morgan predicts that retail investors will pile in for another $360 billion in the second half of 2025. At the moment, investors seem deadset on pushing the market in one direction.

J.P. predicts that we’re poised to push S&P 500 yet another 10% before this is all over.  Why do analysts see us reaching new record highs in the not-to-distant future? 

Well, you can thank our good friend volatility. In the days after President Trump’s Liberation Day tariff presentation, the markets cratered. Today, the market is up 26% from its April 8th low. Retail investors are undeterred by tariffs, spending bills, and market rules. But evidence suggests there is one rule we do follow. 

A recent survey from eToro says that 61% of retail investors self-identify as “dip-buyers”. 

Of course, buying the dip isn’t the only rule of markets.

With this in mind, institutional investors are taking a slightly more cautious approach. Even as stable GDP and inflation figures temper some of our most extreme volatility, businesses remain frozen by a macro-level instability.

Trump’s recent trade deal with Japan is a positive development. But Japan is also a close ally that has long enjoyed a massive trade surplus with the U.S. This was low-hanging fruit, and a far cry from Trump’s “90 deals in 90 days” promise. With August 1st tariff deadlines looming, corporate hiring and investment spending are both stagnant.   

It’s possible institutional investors know something we don’t. For now, retail investors seem pretty enthusiastic about the ride.

But if there’s anything we’ve learned about the Trump economy, it’s that sudden change is the only constant. So if volatility is your favorite–and according to that eToro survey, 91% of Gen Z investors and 87% of millennials say it is–we have only one question.