Tokenized stocks could play a major role in preventing trading freezes like the infamous GameStop halt in 2021, according to Robinhood CEO Vlad Tenev. He argues that outdated settlement systems in traditional finance are the root cause of many market disruptions — and blockchain technology offers a real solution.
In a recent post on X, Tenev described the GameStop trading freeze as “one of the strangest and most visible equity market failures in recent history.” He said the chaos was driven by old market infrastructure struggling to handle extreme trading volume and volatility, especially with stock settlements taking multiple days.
At the time, US equity trades settled in two days. While that has since been shortened to one day, Tenev believes even that is still far too slow for modern markets.
Why Tokenized Stocks Could Prevent Trading Halts
Tenev explained that slow settlement times force brokerages and clearinghouses to manage significant risk between the moment a trade is executed and when it officially settles. During periods of intense volatility, this risk translates into massive deposit requirements for brokers.
That’s exactly what happened during the meme stock frenzy. Robinhood was required to post huge amounts of cash to cover potential settlement risk. Although the company raised $3 billion in just two days to strengthen its capital position, trading restrictions were imposed in the meantime — leaving millions of retail investors frustrated.
Tokenized stocks, which exist on blockchain networks, could eliminate this problem entirely. By enabling near real-time settlement, tokenization would drastically reduce counterparty risk and ease pressure on clearinghouses and brokerages. According to Tenev, removing the settlement delay means less systemic risk and fewer reasons to halt trading during volatile periods.
Even today, settlement delays can stretch to three days for trades made on Fridays and up to four days during long weekends, further highlighting inefficiencies in the current system.
Regulatory Clarity Could Accelerate Adoption in the US
Tenev believes the US is approaching a critical moment for adopting tokenized equities. Major exchanges, including the New York Stock Exchange, are already exploring tokenized stock platforms, signaling growing institutional interest.
He noted that the Securities and Exchange Commission has shown openness to experimenting with tokenized securities, while Congress is working on crypto legislation known as the CLARITY Act. Clear regulatory guidelines, he argues, would give companies the confidence to move forward while protecting investors.
Trading halts remain common in traditional finance. On a single day this week, Nasdaq and the NYSE temporarily paused trading more than 100 times across various stocks, usually for five-minute intervals to manage volatility. Tenev believes tokenization could significantly reduce the need for such measures.
