Swarm launches Robinhood Equity Token to accredited investors

The pre-funding of the Robinhood Equity Token (RHET) is now live on the Swarm platform.

Swarm, the blockchain for private equity, has announced accredited investors would now be able to reserve their stake in a fund created for the purpose of holding equity in Robinhood, one of the popular stock trading app.

CCN explained that Robinhood is not holding any security token offering (STO) nor has announced any plans to offer its shares to the public through traditional public listing. What Swarm is doing is sourcing the equity from former Robinhood employees seeking to cash out ahead of the company’s eventual IPO. That equity would be held in a “shell company,” whose share would be listed on the Swarm platform as SRC20 tokens.

“The first security token of its kind, once the minimum funding goal is reached a Swarm syndicate manager will form an entity using Swarm, acquire equity through established relationships with former employees and other equity holders, and convert committed funds into RHET equity tokens,” Swarm said in its official release.

Swarm provides blockchain-based infrastructure for the tokenization of assets. Each tokenized asset is represented by a unique security token, created using the SRC20 standard. For individual company equity tokens coming to Swarm, an entity is created for the specific purpose of holding this equity. The ownership of this entity is tokenized for investors to access. Their token holdings represent fractional ownership of that entity, which in turn holds equity in a given company. The SWM token itself is used for gas, governance, and incentives on Swarm, similar to how ETH serves as gas for applications running on Ethereum.

The Robinhood Equity Token (RHET) is the first of many tokens representing equity in private companies expected to launch on the platform, Swarm said.

“Secondary equities transactions and refinancing of legal entities which hold private company equity are not new in the United States. What’s new here is the tokenization of these assets, and the doors opened by this innovation,” said Philipp Pieper, CEO of Swarm Fund. “One of the key innovations of tokenization is that token owners can participate in the value creation of the very network they are part of. Swarm is bringing this paradigm shift to companies that are key players within this movement, but have yet to permit the network to participate.”

Earlier in June, Swarm had announced plans to launch tokens representing private equity starting with Robinhood, Ripple, and Didi.