Why Robinhood Are Going All in on Tokenized Stocks and Prediction Markets

**Rob Hadick** (0:00)
Remotely trades at like two times net revenue. And it's a billion dollars of revenue, and it's a two billion dollar company. And they very clearly have figured out that they need to be a higher margin business. They need to be a business that does more things with their customers. They need to be able to have better retention, which means not just fighting over the FX fees and fighting over the costs, but also fighting over other parts of the wallet. And to be able to do all of that, to be able to trade better, to be able to accrue more value, the easiest way to do it globally is stable coins. Like that is, to the point we talked about earlier, Ethan mentioned it, going global is cross border and stable coins is growing very quickly. And now with the card products, the reins and the stripes doing this, that has become much, much easier for people. And so I expect that that continues to grow for all types of financial products and financial companies, whether they're neobanks or not, because everyone wants to become the bank and it's easier than ever, it seems, to be a neobank.

**Simon Taylor** (1:05)
Welcome to Tokenized, the show focused on stable coins and the institutional adoption of tokenized real world assets. My name is Simon Taylor. I'm your host, author of Fintech Brain Food and head of market dev Tempo.
No Cuy this week, but thankfully, stepping back in for me is a wonderful co-host, the one and only Rob Hadick, GP at Dragonfly. How are you doing, Rob?

**Rob Hadick** (1:24)
I'm doing good, and I'm glad to be on this side of the camera this time, where I'm the co-hosting and I don't have to have all the hot takes. So I'm excited to see what Stephen and Ethan say.

**Simon Taylor** (1:32)
Yeah, no, speaking of hot takes, if you could have heard before we hit record, it would have been amazing. But we're hoping the show brings that energy, and I think it will because making a debut is Stephen Sikes, who's COO of Public. How are you doing, Stephen?

**Stephen Sikes** (1:45)
I'm doing great. Thanks for having me.

**Simon Taylor** (1:47)
Thank you for being on the show. Returning is Ethan Chan, co-founder and CEO at Allium.

**Ethan Chan** (1:53)
Thank you for having me, Simon. Nice to see you back in the show.

**Simon Taylor** (1:57)
Before we get on with the show, just a couple of quick notices for everybody. The views and opinions of our contributors today are their own and might not reflect those of the companies they represent. Please don't take anything we say as tax, legal or financial advice. Always do your own research, especially for this one because I think we're going to get some hot takes. Let's start off. Let's warm up with an easy one, guys. This is about the Kraken parent, Paywood, acquiring Magic Labs' embedded wallet business. They acquired it in an asset sale announced on the 27th of July. Price was undisclosed. Magic has created more than 60 million wallets for over 200,000 developers since 2018
It's rebranding as Newton Labs to focus on the Newton protocol. I didn't know this. The deal extends to the day they acquired the acquisition run. They've been on a real run lately.
They acquired Ninja Trader for 1.5 billion and 25, Bitnomial in May 26 for 550 million, REAP for 600 million. Oh my goodness. But I think I should start with Ethan on this. It seems like anybody who's doing embedded wallets, whether it's dynamic or privy, is getting acquired at the moment. Why is this stuff happening? What are you seeing in the data?

**Ethan Chan** (3:12)
I think for us, quite a few of them are our customers, actually.
In terms of the data for why we think they're getting acquired, I think a lot of these solutions belong in a broader platform and suite. I think the consolidation, fireblocks acquiring dynamic is part of that, Stripe acquiring privy. To me, it just makes sense that they live together. I think living by itself, it's hard and being an independent company is always difficult, especially in this market. I think it's a combination of the macro and the fact that it's better as part of a whole platform versus standalone.

**Simon Taylor** (3:45)
Yeah, I guess it does make sense as a bigger piece. Stephen, have you been looking at embedded wallets? Is it part of the public platform?

**Stephen Sikes** (3:51)
We don't have embedded wallets today, but I think as we look at crypto, self-custody versus centralized and custodial business, obviously has a ton of advantages, particularly in the US where it is an approach to avoiding some of the ambiguous regulation and maybe even onerous regulation. I think as we've seen adoption of these self-custody wallets, I think it's mostly in service of delivering a very similar service model, but probably with a lighter touch of the regulatory aspect.