“We’re at the very beginning of what will be a tokenization supercycle,” said Tenev, pointing to recent initiatives to tokenize stocks. In a follow-up interview with Fortune, Tenev said this process will be disruptive but that it will create value for both investors and the broader financial industry.

The term “tokenization” describes the process of taking various assets and offering them in a blockchain wrapper, allowing them to be traded by means of the same technology that underpins Bitcoin. Firms like Robinhood and Kraken are already offering tokenized stocks in overseas markets, while both the New York Stock Exchange and Nasdaq have announced plans to do the same.

During the earnings call, which came after Robinhood announced results that narrowly missed analyst expectations, Tenev said the company is well positioned to ride a future tokenization wave. He pointed to Robinhood’s crypto wallet, the company’s build-out of its own blockchain, and its existing efforts to sell tokenized stocks.

Tenev’s comments came in response to an analyst question about Robinhood’s views on when crypto prices might stabilize. In recent weeks, Bitcoin has enjoyed a modest rally, but is still down around 40% from its all-time high, while overall crypto trading activity has fallen off significantly.

This downturn contributed to the company’s overall earnings miss, with Robinhood reporting that crypto trading activity fell 30% from the previous quarter. Overall, crypto contributed around 12.5% of Robinhood’s overall revenue, which is a far cry from late 2024, when it accounted for over a third of revenue. This hit, however, has been softened by the fact that Robinhood has succeeded in growing other business lines, notably banking and prediction markets, allowing its overall revenue to remain steady.

If Tenev’s predictions are correct, though, crypto is likely to contribute to Robinhood’s growth in a significant but different manner.

A growing tokenization pie

For now, tokenization is still nascent as most investors remain unfamiliar with the concept, and as the U.S. lacks regulatory infrastructure to accommodate it. Nonetheless, it is far from a fringe idea.

In recent months, big banks like JPMorgan and Citi have redoubled their commitments to blockchain technology, while Wells Fargo has said it is developing a digital wallet that will facilitate the trading of tokenized stocks, bonds, real estate, and traditional crypto assets.

The appeal of tokenization for both banks and brokerages like Robinhood is that it facilitates a trading and settlement process that is faster and more secure than the current system, which relies on a cumbersome multiday system of recordkeeping.

According to Tenev, full-scale tokenization of the financial system will play out over years and, for now, will not create significant disruption to legacy players since the initial phase will take place in overseas markets, where many investors are clamoring for exposure to U.S. stocks.

The upshot, Tenev says, is that the overall pie of U.S. equity trading will grow, which will mean that legacy financial system players will be less likely to resist tokenization, and encourage regulators to facilitate its expansion.

There is, however, uncertainty over which of two models will be used to implement tokenization. The first, used by the likes of Robinhood and Kraken, entails companies buying conventional stock and then issuing corresponding tokens on a blockchain.

The other model, used by blockchain-first startups like Superstate and Securitize, involves issuing the stocks natively on the blockchain—a process that boosters say is more secure, and prevents situations where the value of a “wrapped” blockchain version of a stock might become decoupled from the underlying asset. Such a scenario, critics fear, could occur in the event of a bankruptcy or a breakdown in the custodial process.

Tenev dismisses such concerns as “edge cases” that can be easily solved with regulation. He added that the “wrapped” version of the tokenization process favored by Robinhood is more practical since it doesn’t require companies to create separate tranches of their shares, a process Tenev says could also reduce overall liquidity.