Johann Kerbrat on Why Robinhood Is Tokenizing Everything

Transcript

Johan, welcome to the show, man. Good to see you. Thank you for being here, man. >> Thank you for coming. Yeah, pleasure. >> Yeah, man. Robin Hood crypto has gone from an experiment a couple years ago to a fullyfledged market. John, what has it been like the last couple of years working uh at Robin Hood and building out this entire arm of the business? Um it's it's absolutely blowing up. >> Yeah, it's been very cool. uh you know we started in 2018 um actually during the winter of crypto and so back in the days a lot of people were saying like what do you even care about listing Bitcoin and Ethereum and so at the time our thinking was really like we want people to have access to all type of financial instrument that they care about and crypto was one of them um but

it you know since then we listed more assets we started to offer staking in most of the states uh transfer we have our own self-custody wallet um and we also launched in Europe so last year we did north of a billion dollar in revenue venue just for the crypto part and so we are really excited to keep building on it and you know now the market is a bit calmer um but we are focusing on building the new feature that people will use the next time the market come back >> yeah like you said market is a bit calmer but prediction markets have been absolutely insane you guys uh I have a stat here prediction markets search 320% on Robin Hood why do you think the market is so crazy about prediction markets >> well I think it's >> gambling [laughter] >> I I I think you know it's a new way for

people to invest. Um so for a lot of people before like they could not uh you know hedge against what are the feds going to do about the rates or what is the future of AI or what is the best uh company to to build uh a model but with prediction market and even contracts you really have different ways to actually hedge your portfolio. Um and I think that's something that is very new. So now if I want to uh you know invest compared to AI instead of trying to pick one specific stock like Nvidia, AMD or Microsoft or whatever I can actually uh pick one of the event contract that is about AI and actually have a lot more ways to invest in the market. So we think it's a very different way that people didn't have access before and it was more reserved to very specific

institution. Yeah. >> Um and so you know we're really excited. It's it's one of his uh fastest growing business at Robin Hood. And so, you know, it shows also the power of our super app where you have everything within one app. You don't have to transfer money between the different platform. Um and you can go from buying stocks to buying crypto to buying event contracts. >> Yeah. Um one one followup question on prediction markets. Given the success of the prediction markets product and and like you said the super app concept of Robin Hood, do you intend on verticalizing more of the prediction market stack? Right now there's so much order flow going through Robin Hood. I think maybe there's other exchanges that are, you know, settling some of these contracts. Do you think Robin Hood might

internalize any of that market execution? Yeah. So we we think that the exchanges are almost a commodity at this point and for for like for any product that we launch we usually route to multiple exchanges. So it's the same for crypto, it's the same for equities where we we route to multiple market makers. Um and so for prediction market we already route to multiple exchanges. We have uh KI obviously but we also have forecast tax. Um and we announced a joint venture with CEOA uh Rossera which is going to be an exchange that is going to support the type of event contract that we we care about and for us it's important because it will allow us to really support everything that we want to offer to our customers.

>> Yeah. when it comes to kind of integrating a lot of these under the hood products, right? Like as you said, kind of thinking about Robin Hood as an aggregator of crypto uh protocols and products. One that comes to mind obviously from a competitor is the way that Coinbase has done Bitcoin back loans with uh with Morpho. I believe that they've done this kind of setup where you can deposit your Bitcoin, borrow against with stables. I believe you guys have also integrated or integrating Lighter for Pers in the future. Um and and kind of think about how that works. How how do you think about building a crypto business with different product lines and utilizing the underlying tech, whether it be these onchain markets for lending, prediction markets, per like is is Robin Hood

crypto just going to eventually be an aggregator of all of onchain protocols kind of serving order flow to onchain protocols and and using them directly? like how do you guys think about that uh uh transition and kind of uh being the front end for a lot of the onchain uh products which don't actually have the best UX. >> Yeah. Well, that's really something uh that we focused for a long time. That's why we launched Robin wallet which is our self-custody wallet option. Um and the idea was to give you know all these customers that are used to the Robin Hood UX and UI and giving them the ability to go on chain and go on DeFi and to your point like uh interacting with some of these protocol is kind of daunting the first time you're trying to do it or you always have to bridge you

always have to think about gas so all these things we are kind of taking it away and abstracting it so that people don't have to always keep thinking about this but uh there is more we can do to your point like I think for example the the lighter investment we haven't done any integration yet, but we we are investing into um the the company. Um and we think that we can build on top of it. Um the other thing that we want to use is crypto as a way to kind of replace some of our backend system. So for example, we launched tokenized stocks in the EU. Uh and where we are already with 2,000 stocks um US stocks and ETFs that are like tokenized and available to our customers. And for us it was really important to make sure

that uh we could offer like everything that tokenized assets can offer to customer from uh 24/7 to fractionalization to uh instance element. Um and so we can use a crypto rails for that replace slowly like the the old traditional system that we have and slowly we will be able to kind of bring all these advantages to to customer and so in the EU for example the markets are not always open when people are awake because of the time zone difference but with tokenized stocks they can actually use it at any time. >> Yeah. Yeah. One of the biggest business lines for Robin Hood is options. I think I saw a stat it was up to about $4 billion a year in options just from either being on the other side of the

trade or facilitating the actual trade itself providing that market. People in crypto often say pers are a far better and superior product to options. Do you agree with this? What's your what's your take? If so many people are effectively trading zero day options, why not just let them have per? How do you think about per as a product comparison to kind of these shorter term options? And you know, I'm just curious like how you may see pers evolving into Robin Hood's product. >> Yeah, so we already offer per in the EU for example. Uh it's somewhere where there's a clear regulation to to offer per. So we've launched about 12 different contracts at this point uh with 10x in leverage. Um and so yeah, we think it's an easier product for a lot

of reasons. Like for example, you don't have to manage the expiration dates constantly. Uh you also don't have to worry about um some specific funding mechanism and with per you can always kind of settle on a constant basis. Uh which we think is a very big differentiator and that's why you know in a lot of places it's working so well. The other reason is uh the type of products that are being created on per you know we see uh commodities right now going on on uh some dexes in Singapore that are going very well and for the same reason like you know the the world doesn't stop turning on the weekend and so people want to be able to hedge themsel and invest on the weekend when something is happening in the Middle East or something like that. So um we we really think it's a great product and

we've been you know discussing with the CFTC like many others uh to see how we could bring it on shore in the US. Uh but we need to have clear regulation on this one and um the chairman has mentioned multiple times that it's something that is top of their mind. So you know we are hopeful that we'll be able to support it and when there are clear regulation we'll be ready like we already have the technology in the EU so we know how we can bring it here in the US. >> Yeah. Yeah. And on the regulatory front, your CEO of Vlad has been very much bullish on Twitter like unleash the yield for the stable coin yield part of clarity act. We got a big push over I think it was over the weekend last week uh where basically we got a bit more

clear regulation uh notes about the difference between rewards and interest. Basically giving banks their win on the interest part saying look idle stable coins can't just earn interest. you need to put them into, you know, from what I understand, and I'm curious how like the product side will look, but you have to like click a button that's like deposit them into some pro some yield interest kind of uh opportunity, right? Is that how it could look for something like Robin Hood? Like if I'm a user holding stable coins on Robin Hood, I want to earn interest based on kind of this notes from last week. Is it just going to be as simple as like earn using Robin Hood gold or earn using Robin Hood stable stable coin interest versus just

if I have stable coins I'm going to earn? Is is that how simple it is? >> Yeah, you know, we have to see the final final text because it's always uh until it's it's passed as a law. I'm trying to be cautious, but it sounds like we should be able to find a good compromise. And you know I think for us we were always clear like uh stable coin uh rewards are not the same thing as FDIC insured uh bank account or saving account. So we were never in this world like we were trying to uh change the perception of customer but at the same time and and you mentioned you know Vlad uh what we really think is that we don't want to penalize somebody who is using stable coin because they they want to move money quickly between wallets or between platform. Uh, so we want to make

sure that when they're holding the stable coin, they're also able to to get their rewards. So, um, it sounds like with some of these actions, we will be able to to pass some of the the rewards. And so, uh, we're pretty happy about it. And we think that, you know, if we can unlock the entire clarity bill, that will be also a great win for for the customers because it means that we'll be able to build uh for the entire US instead of having like this fragmented system right now where we have different products and different rules based on states. Um, and we think with clarity we can actually start harmonizing all the products that we have everywhere.

>> Yeah, I've got somewhat of a general question. You know, there's so many things happening even beneath the surface. It feels like Clarity Act with stable coins, prediction markets, per DeFi, everything is just sort of looking around thinking what's going to break out next. What is what do you think? What what is the what what do you have any bold predictions? what is your boldest prediction for you know the upcoming year of things that you think are going to break out on Robin Hood or in the ecosystem in general? >> Uh we we think tokenization is going to be one of his big uh breakouts. You know I think it's still very difficult for a lot of customer to access international stocks. It's very difficult for international customer to access US stocks. uh you know if you think about just the the north um hemisphere it's a

bit easier but if you start looking at different type of continent it's it start to be a lot more difficult and you have a lot of taxes you don't have a lot of ways to get yield for example um in a way that is safe so we saw it with stable coin for example like the amount of countries that were trying to buy USDC or USDT because they wanted a safe access to the dollar uh we think that we can actually bring that to more than just uh currency we think that uh commodities, we think that equities, uh private stock, for example, all these assets are are doomed to be tokenized at some point and um people will be able to really easily just acquire them and build on top of it. Not just having them sitting on their portfolio, but um

actually lend against it, being able to borrow, maybe get a mortgage against it. Um and it's something that right now you can do as an American if you have a pretty big portfolio. Um but the normal you know uh person that is trying to access private equity for example it's either impossible because they are not accredited investor or they don't have access to the flow uh and we think with tokenization we can actually harmonize everything and make uh you know everyone being able to access it. >> Yeah I mean one of the things that I'm excited about like for example right now the Korean stock market is going crazy right and it's absolutely mooning it's like people are very excited about it but there's not really a way to trade that on chain right now. Same with like these uh finally we've gotten like the

pre-market IPOs for some of these AI companies, but there's also a ton of Chinese IPOs and pre-market uh AI Chinese companies that people want to get exposure to. Deep Seek's doing a funding round right now, I think, at about a $20 billion valuation. How how quickly can you guys move on this? Like how quickly can the expansion of listed assets as the tokenization kind of mania continues? Can Robin Hood be very fast to to list tokenized assets across tons of different jurisdictions? How much kind of uh friction is there to actually get those listed on the front end?

>> Uh it will depend depends of the the asset, depends of the regulation that we have around it. Um but overall, you know, we we have a way to build technology that uh we we've been piling on for the past 10 years. Uh we have one of the strongest engineering team in in the valley in my opinion. And so um if at some point we're able to do something on a regulatory front where we're able to move very quickly. So we've seen it multiple time for example with AI adoption in our products uh we I think are one of the brokerage that's added uh the most AI system within the company.

So uh if you go for example on a on a coin detail page or on a stock detail page will give you a digest of what's going on on on the market. And uh that was one of our top requested feature. people wanted to understand like they receive a notification the price of a stock of a coin moved why is that and so we we created this digest um and we also have the cortex assistant where you can actually discuss a bit the strategy with with the assistant and really find ways to to improve and so it just shows you that uh when Robinood has an idea we we can move very quickly on it >> and on on this tokenization front this feels like it's caught everyone by storm uh including the DTC who came out and they they announced announced that they have this development of this

tokenization service. 50 plus firms are included in this uh this cohort. Robin Hood is included. Can you just give us a sense of what this DTC uh tokenization service is going to mean for companies like Robin Hood? It's slated to go live October 2026 is when it's going to go into production. How do you see this progressing? What does this mean for Robin Hood? >> Well, I think you know for us it's always really important to partner with firms like this. like we we want to make sure that if there is a tokenization effort, we actually support it. For a very long time, we've been very loud saying that you know T+1 settlement is too slow and that we need to to get to a place where we can go a lot faster and we want to get to 24/7 trading as well.

Um and so for us, we want to support any type of force like this and that's why we we we are part of this one as well. Um but you know at the end of the day I think tokenization is just like the next uh phase of the technology where you'll have to either adapt or you will basically die because nobody will want to go back to the old traditional system. Um and so it makes sense for for all this company to to adapt the technology and to start building on it. >> Yeah. Joan, last thing for you. I know you have a panel to go to which I'm sure is going to be great. People on Twitter like to compare Robin Hood and Hyperlid.

They like to stir the pot by saying uh you know by comparing revenue metrics, valuations, users, scale, and make an argument for both sides, right? And so I I'm curious what your take is on Hyperlid. Is this a competitor to Robin Hood in the future for Robin Hood crypto? Do you not really worry about what they're doing? People are like, "Should I buy Hood or Hype?" People are like, "Hype's a better deal. Why would I own a hood?" There's all this back and forth, man. What is it like from your perspective to watch the the rise of this kind of massive purpose stacks come on chain and really try to be like a a center of gravity for uh bringing a lot of offchain and onchain prices uh or price discovery on chain. What does this

mean? >> Yeah, you know for us it's two different type of businesses. You have one that has regulation and licenses and you have one that is fully decentralized. And so you can't really compare Apple to Apple on this one. But um what I really like about it is like the amount of people that are getting exposure to per now and getting exposure to these type of of new assets. And so it's something that we really care about and on our side we're also building it but in a different way where it's centralized where uh you know um if something happens you can actually go um against Robin Hood or you can talk to a regulator about Robin Hood. So so it's a bit of a different world. Um but in any case you can buy hype actually on the Robinood platform. So, you know, we

don't necessarily see each other like as as competitor like that don't talk to each other. We we think they're a great team and uh we we wish them the best. >> So, you're bullish. >> You're bullish or no? >> Not necessarily bullish or not, but you know, you can you can acquire >> say he's bullish. Johan, they're cutting us short. You got to go to a panel. Thank you so much. We'll have you on again soon. She was ready.