Five years have passed since the GameStop incident in 2021 that shocked the global market. Robinhood CEO Vlad Tenev recently wrote a lengthy article reviewing this financial market crisis, pointing directly to the real culprit behind the forced trading restrictions: not retail investor speculation or brokerage firms' bias towards Wall Street, but rather the outdated settlement and clearing system of the US stock market.
Looking back at the GameStoop incident, it was a "community vs. Wall Street" battle entirely driven by Reddit. Institutions released short reports, only to be wiped out by retail investors. Vlad Tenev described it as: "When you combine old, slow financial infrastructure with instantaneous, community-driven market behavior, disaster is almost inevitable."
Robinhood CEO: Under Immense Pressure from the GameStop Incident
Vlad Tenev pointed out that in 2021, Robinhood and several brokerages were forced to suspend "buy" transactions for some meme stocks (most notably GameStop), not due to the company's subjective decision, but due to the enormous capital requirements pressure from liquidation agencies.
At the time, the US stock market still used the T+2 (settlement two days after the transaction) system. When a few stocks, such as GameStop, experienced unprecedented trading volume and volatility, the risk control rules of clearinghouses required brokers to deposit huge margins before settlement to prevent default risks. As a result, capital demand surged instantly, trading was restricted, and millions of retail investors were furious.
Looking back at the GameStoop incident, it was a "community vs. Wall Street" battle entirely driven by Reddit. Institutions released short reports, only to be wiped out by retail investors. "When you combine old, slow financial infrastructure with instantaneous, community-driven market behavior, disaster is almost inevitable," Tenev described it.
From T+2 to T+1, stock tokenization is the future.
Following the incident, Robinhood lobbied regulators to reform the clearing system, ultimately leading to the reduction of the US stock market settlement cycle from T+2 to T+1. Tenev even stated that this was one of the few truly structurally significant achievements during SEC Chairman Gary Gensler's tenure. However, the problem was not truly solved. In an era of 24-hour news cycles and instant trading reactions, T+1 still means that Friday's trading effectively becomes T+3, and during long holidays, it could even extend to T+4.
Vlad Tenev points out, "This is still too slow, and the risks remain." But the solution isn't patching, but rather replacing the entire system: stock tokenization.
Tenev believes the real breakthrough lies in tokenization. Converting stocks into tokens existing on the blockchain not only enables real-time settlement, 24/7 trading, native fractionalization, and lower liquidation and capital costs, but more importantly, it significantly reduces systemic risk. This eliminates the need for clearinghouses and brokers to bear enormous uncertainty during settlement periods, thus rendering trading restrictions obsolete.
In fact, Robinhood has already launched tokenized versions of over 2,000 US-listed stocks in Europe, allowing European investors to hold and receive economic benefits equivalent to dividends. Tenev revealed that in the coming months, Robinhood plans to further expand its applications to include 24/7 trading, DeFi integration, self-custody, lending and staking of stock tokens.
Tenev emphasized that the technological feasibility has been proven; the real obstacle lies in regulatory clarity. He pointed out that the recent US regulatory environment has entered a rare window of opportunity. The current SEC leadership has shown greater openness to innovation and experimentation. Congress is considering the CLARITY Act, which requires the SEC to establish a modern regulatory framework for tokenized assets. The key significance of this legislation is to ensure that this path will not be overturned by future changes in political parties.
This article, "Robinhood Reflects on the Fifth Anniversary of the GameStop Event: Stock Tokenization is the Future," first appeared on ABMedia, a ABMedia .
