If you're reading this and still haven't signed up, click the subscribe button below!

This week Simon Taylor is joined by:

●       Rob Hadick, GP, Dragonfly

●       Stephen Sikes, COO, Public

●       Ethan Chan, Co-Founder & CEO, Allium

🎙️ Listen to the latest episode of Tokenized here.

📷 Watch on YouTube.

Payward, Kraken's parent, acquired Magic Labs' embedded-wallet business, now rebranding as Newton Labs. Ethan Chan (Allium) said businesses such as Magic, Privy and Dynamic fit more naturally inside wider product suites than as independent vendors.

Rob Hadick pushed onon where value accrues. Stephen Sikes said it goes to whoever owns the customer and the relationship, not the vendor a layer below.

A fintech can connect to a DEX, a yield provider and a small number of other protocols to cover much of its crypto demand. Plaid’s position is harder to reproduce because it maintains thousands of bank connections with different APIs, data structures and maintenance requirements.

The panel’s conclusion was that the wallet remains useful, but becomes easier to monetize when combined with payments, custody, on-ramps and distribution. The vendor sitting one layer below the customer relationship has less pricing power.

Sikes said Public’s customers have shown little interest in funding brokerage accounts with stablecoins. They hold more money in bank accounts than in USDC, while ACH rounds to free at Public’s scale. The stablecoin proposals Public has received have cost between five and 50 basis points.

Chan argued that stronger use cases sit outside US consumer finance or inside B2B flows. He cited research from Allium and FXC Intelligence showing that B2B accounts for 79% of fiat cross-border payments but 49% of stablecoin flows. Consumer-to-consumer payments account for 15% of stablecoin volume, compared with 5% on fiat rails.

Remitly shows how that pays off. A wallet and card on the receiving side allow it to earn interchange after the transfer, rather than monetizing only the sender. Stablecoins matter more where they remove cross-border funding and settlement friction than where they compete with cheap domestic bank rails.

CoinDesk reported about $70 million of tokenized real-world assets on Robinhood Chain within two weeks of launch, with GameStop ahead of Nvidia and SpaceX on daily volume. Simon flagged the fivefold framing as hype.

Sikes agreed the number was small but didn't read it as bearish. Robinhood cannot justify building a separate brokerage in every market, while many international investors still face expensive or limited access to US securities. Tokenized stocks give it a way to test demand without reproducing its full US operating model country by country.

The panel had Robinhood’s Q2 headlines during recording. We have since checked the full release. Robinhood ran $956 billion of equity notional volume last quarter and holds $369 billion in platform assets. Comparing against that, $70 million onchain is a rounding error, a fast start from a low base rather than anything at brokerage scale.

Tokenized stocks cannot create a continuous market while the underlying securities, banks and clearing systems remain closed. Someone must hold the risk when the reference market is unavailable.

Simon raised the onshore case - running off-hours cash on tokenized money-market funds when banks and clearing are closed over a volatile weekend. Hadick agreed, but noted that with today's wrappers you still cannot buy the underlying off-hours, so someone has to hold weekend risk until the clearing infrastructure itself changes.

Simon pointed to an existing precedent. LCH already uses money-market funds as cash-equivalent collateral for off-hours derivatives clearing in Europe. The mechanism therefore exists, even if it has not been extended to a continuously traded equities market.

Sikes argued that prediction markets may already matter more to Robinhood than crypto. Robinhood published its Q2 results the night before recording, so he was reacting to the numbers in real time.

We have since checked the full release. Event-contract revenue reached $156 million, above equities at $129 million and crypto at $100 million. Crypto revenue fell 38% year on year, while event contracts traded rose more than tenfold to 13.6 billion.

The immediate news peg was Robinhood’s reported talks with Crypto.com. Sikes used that deal to explain why Robinhood now looks like a broker sourcing contracts across venues, not a front end for one exchange. It already works with Kalshi, ForecastEx and Rothera.

Chan said Allium tracked about $50 billion of July notional volume across its covered venues, including roughly $39 billion on Kalshi. He estimated that Kalshi grew 53 times year on year, compared with six times for Polymarket.

For Sikes, the institutional case came down to basis risk. Event contracts let investors express a view on an outcome directly rather than trading a proxy exposed to other variables.

Hadick argued that even sports contracts can support commercial hedging. He described an e-commerce company considering a position linked to a football team’s performance to offset inventory exposure. CME is pursuing the same logic with planned sports-performance futures for sponsors, insurers, stadium operators and broadcasters.

The broker-first model creates a conflict question. Robinhood has an economic interest in Rothera, a CFTC-licensed exchange and clearinghouse independently managed through its joint venture with Susquehanna. Robinhood says more than 3.5 billion contracts have traded there. It is therefore sourcing contracts across venues while holding an interest in one of them.

Sikes drew a line Public will not cross. It will not offer sports contracts because he does not believe gambling belongs in an investment account. Simon framed the remaining issue as a balance between market utility and retail harm.

The proof point is institutional hedging demand, whether that comes from Fed and earnings contracts or sports-performance exposure. Retail speculation supplies much of the volume today. Commercial risk transfer is what would make prediction markets capital-markets infrastructure rather than a faster sportsbook.

Thanks so much for reading the Tokenized Newsletter!

Please share this edition or share it with your colleagues if you enjoyed it!

Disclaimers