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Donald Trump just bailed out the cryptocurrency market , Robinhood shares, and may be planning to organize a bailout for the stock market, which is crazy considering the stock market is about 4% off all-time highs. Kevin, this is nonsense. How can I even claim that Donald Trump is trying to save the markets again?
Well, the SEC just approved a rule change that not only reduces disclosure , but also opens up a big new market not just for cryptocurrencies, not just for Robinhood, which we'll talk about. We'll also talk about Robinhood's valuation and price targets, and how this could affect brokers and others. We'll talk about all this closer to the end.
But it also just opened up a whole new opportunity for people to invest money in the US stock market, especially for foreigners. So, what am I talking about? Because a lot of people say, “Kevin, okay, you know, we’ve heard about this thing with tokenized exchanges. So what? Does anyone care about tokenized shares?
" Okay, the market is open 24/7." This is the title. If you get stuck here, you won't see how they just organized the most glorious pump for the stock market and cryptocurrency. I'll show you this in the best way possible with this great whiteboard and a few sheets of paper that I printed out and prepared.
The easiest way to start is to think about it – imagine you had $100,000, just to simplify the math, in Bitcoin. And let's assume that a significant portion of that Bitcoin has appreciated in price. A lot of people, you know, maybe had a base value of five thousand dollars or something like that. A lot of people don't want to sell this Bitcoin because they're going to pay a lot of taxes, especially if they're international, like they're in Europe and they have to pay about 50% taxes, or they're in California and they have to pay a lot of taxes, okay?
I'm from California, so I can throw money at him , okay? I tried to run for governor. We got about a million, almost a million votes, you know? I thought we were crushed. We did our best, but to be honest, I do n't really like politics. Uh, 100 thousand in BTC, let's say. Many people do not want to use leverage for their Bitcoins because there is a high risk of volatility.
Because let's say you hold Bitcoin on- chain and then you want to leverage it using , I don't know, um, Binance or something else, you can't offset the volatility of Bitcoin with stocks. So , if Bitcoin falls by, say, 40%, you may be required to make a margin call , and then you will lose your Bitcoin.
You don't want this. So there are a lot of people who don't want to sell their Bitcoins, and they don't want to leverage their Bitcoins because there's too much risk. But what if I told you that Donald Trump just made it so that anyone who wants to leverage any crypto asset can now do so through what's called a unified portfolio I-A-I or E-A-I, I do n't know.
Unified margin portfolio. It sounds complicated, but essentially, imagine that you can use cryptocurrency in the same margin account as on-chain cryptocurrency in the same margin account where you hold stocks in a one-to- one ratio, which might be, say, the S&P 500. Now you can significantly reduce the leverage volatility of your crypto portfolio and gain access to stocks.
Now you might ask, “Wait a minute. What does this have to do with me or Robinhood? Well, that's all. And it's a little hard to explain, so we'll do our best. But here's what basically happened. I do n't think this is a surprise either. The Clarity Act failed 3 days ago. Midterm elections are approaching.
Many in the crypto community voted for Donald Trump, and he failed to pass the Clarity Act. Yes, Democrats blocked this decision, but they still control the Senate and the House of Representatives, and they failed to get a vote to close it. Good. So what happened? Well, they just forced the SEC to pass a rule change.
The SEC, the chairman of the SEC, is Paul Atkins. He is Trump's brother. Deregulation, pro-cryptocurrency, we will do everything we can. So what did they announce? They announced something called the " SEC Innovation Exception." And this, in my opinion, is a game changer for stocks. So, here's how it works.
For 5 years, that is, a 5-year exemption, they are repealing the rules that say that whenever you buy a certain asset, it has to be done at the best price. This is related to stock routing , when you buy stocks, there is something called the best national price or the best buy or sell price. Approximately so.
Interestingly, this was a 2005 rule that was just repealed because of this exemption for tokenized shares, and you see how that results in money for the entire economy and the entire market. But, look at this. Let's say it's 2004 and you want to buy, I don't know, Microsoft stock or something like that, and it's worth, let's say, $50, okay?
And let's say the NYSE values them at $50, and the NASDAQ values them at $50, and, well, you know, 10 cents. You place an order. Previously, you had to choose which location you wanted...trade to hold. Then , in 2005, they made a rule change that said it was rule 611 for anyone who was interested.
It was called the through- trade rule. And it required that every time you submit an order , the order would automatically be routed to one of the 16 exchanges at that time that had the best price. Okay, this doesn't work very well if you're going to try to do a tokenized stock exchange. And here we come to this single leverage.
You'll see it in a moment. So, this rule should protect retail trade. It eliminates friction. It makes it easy for retailers to simply place an order and you simply get the best price. And it's all based on NBBO, national best bid or offer price, I'm sure that's exactly what it means. This won't work if you have tokenized shares.
Because if you have tokenized stocks, how are you going to say that tokenized stocks should have the same best price as these exchanges with really developed markets and developed market makers who , you know, they all get paid for order flow. We'll talk about this at Robinhood in a moment. But it's really difficult.
So the SEC just said that for a 5-year test window, we're going to say that equity tokens backed by each other can be traded on the blockchain without having to be listed on an exchange, and you don't have to get the best price or offer. This is, um, an addition to another way to raise money, but it's a less significant thing.
This essentially means that the routing rule for tokenized shares is dead. This sounds bad, but it's a way to open up all the assets that are on the blockchain, which potentially have huge untaxed, unrealized gains. This is a way for all of these people to potentially move money into stocks by diversifying their blockchain crypto assets, especially if they are leveraged, into US stocks.
So, people who have never used leverage before, you mean we expect there to be somewhere between $135 billion and $200 billion in just healed bitcoins that haven't been taxed. Many of these people don't want to pay tax. And a lot of... People worry that Bitcoin's volatility will make them less interested in leverage.
But if you can now buy tokenized stocks and have this single margin portfolio, you may face less risk, and so maybe you should take on the US stock market hype. Buy the S&P 500 or buy individual stocks, whatever. The SEC rule change came just two days after the failure of the Clarity Act, I don't think it's a surprise.
Two days after its failure, they're like, "Oh, let's save the crypto community a little bit with this tokenized stock exchange tool." “And that’s a boon for Robinhood and brokers. Here's how it will practically work. I created a little chart for this. So, let's say you have Microsoft stock that you hold right here .
It's your own stock that you hold with, you know, a broker or somewhere else. To tokenize this, you need support for each other. So, the broker holds the stock. Now they are going to tokenize it. No one else can buy it. So, you have removed this stock from the liquidity of the stock market and turned it into a token.
But you moved that token liquidity to on-chain liquidity. In other words, you are removing supply from the stock market, which drives up stock market prices. This is, you know, a boost for stock market prices in general, I think, over the next few months. It will take some time for all of this to be implemented.
But you bring that liquidity to crypto- chains, where I think there's an appetite for US stocks, especially because of the privacy aspect that you get from... "you can buy these stocks on the blockchain. Think about it. One of the great things about cryptocurrency is that it is 100% transparent with wallet addresses.
You can see wallet transactions on the blockchain. I mean, obviously there are some privacy blockchains, but generally, in Bitcoin, for example, you see every transaction. Some second- level protocols try to hide this, obviously, but foreign people who don't want their information known, who don't want to be tied to a wallet, may not be able to buy US stocks.
But now, moving US stocks to the blockchain, and the SEC giving the green light to it, lifting other restrictive rules to allow it, it means that you can actually have random wallet addresses moving money into US stocks, and you have no idea who it is. In my opinion, this does two things. First of all , it not only allows anonymous people to buy US stocks and, in essence, you know, it drives up the stock market.
But as I mentioned earlier, it also allows a crypto investor who has a profit in the crypto market to not sell, to leverage in a more diversified way through a single margin portfolio and to get lower stock market volatility, which I know is... It's strange to say that it's lower stock market volatility, but let's be realistic.
The S&P 500 is much less volatile than the crypto market. So when you combine these two things, you get the perfect stock market pump that Donald Trump just created. This is a pump for the crypto market, a pump for brokers, and a pump for the stock market. This is truly brilliant. And relaxing the rules, such as not having to get the best national price or offer, buy or sell, is just a means to an end , to pump it up for cryptocurrency, brokers, and stocks.
What does this mean for Robinhood and how does Robinhood make money? So, this is where things get pretty interesting. Because Robinhood makes a lot of money, obviously, by charging for order flow. And the routing rules are gone , which means you no longer have a truly transparent market for these tokenized exchanges.
This means spreads can be wider and Robinhood can make even more money. You obviously also get some benefits with the token. And this is how Vlad is going to sell it. So, let's talk about how this is going to sell, and then we'll talk about how Vlad makes a lot of money from this. So the way they sell tokens is this: they say, "Hey, they're trading 24/7." "This is the key phrase." The market doesn't open, doesn't close, doesn't ring a bell.
These puppies are paid in minutes. It usually averages around 12 minutes–this is what we see for token settlements. Uh, and you can buy them with cryptocurrency. You don't need to exchange them for dollars first. And then of course, you know, D5 protocols, agent protocols that you can essentially program into your tokens that can now directly buy US stocks.
To be fair , we've already seen some of this. There is currently a tokenized stock market worth approximately $2.4 billion. It is mostly offshore . These are mostly derivatives, not real property, and they are mostly criminals. What you are getting now are actual shares backed by each other that are tokenized.
So it's no longer a derivative wrapper, it's actual ownership of the stock. So instead of a $2.4 trillion derivatives market, you could potentially turn this into a market of hundreds of billions of dollars inflow into the stock market. And again, all of this is due to..." Donald Trump. It's burning, baby.
I swear, if you go to the White House, I bet they'll put the NASDAQ and S&P 500 on the screens, and then they'll turn on the song. Don't you know, it's incendiary. So how does this work for Robinhood ? And why is it so interesting for Robinhood that Robinhood is up 7.7% today and Bitcoin is above 80,000.
What's going on here? Robinhood is going to make a ton of money off of this, but first we need to explain how all this crap is going to work. So while I'm cleaning up the board , I'll remind you that today is the coupon expiration date. You can use this Warshes balls coupon and join us. You get all nine courses, and you can also get a tax deduction.
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And I have to say, some of our latest Alpha reports are really picking up steam. So, I really encourage you to get involved in this. But we were sending out a lot of buy alerts amid the downturn, and we were very optimistic. But we are also very optimistic about certain sectors. So you can learn about all these theses.
If you join, be sure to watch the September... Honestly, I would watch part of yesterday morning's live broadcast from September 16th, er, yesterday morning. And then watch today's one too to catch up a little . You can catch up on your weekend here. Watch these three live streams to get a little insight into how we do these live streams and how Alpha reports fit into them.
I think there's tremendous value there, and I think you'll get your money back very, very quickly . Of course, I can't guarantee it, but I think you'll like what you get there. So, I would recommend trying it. So, let's talk a little bit about payment for order flow and then how Robinhood actually prints with this tokenized exchange.
So, let's say for a minute you're going to buy, um , I don't know, Tesla stock, okay? And I'm going to intentionally expand on this to make it a little, um, clearer, as a lesson , because spreads are pretty tight for public stocks. So, let's say you're going to buy Tesla shares at $350 or $360. We'll call it the purchase price here, and we'll call it the asking price.
This is why you usually see a price range when you buy a stock or option. They are usually much closer to each other. This is completely normal. This is the spread. Let's say a company like Citadel goes out and buys shares . And so, let's say they buy a stock, they're high-frequency traders, so it does n't really matter where they buy it.
They are just trying to get the spread on each side. They are going to buy, say, $355, and they are considered market makers. So they sit on the NASDAQ or the NYSE, and they are one of the market makers. They buy the stock, and then they offer to buy some of your stock at 350, they offer to sell some of your stock at 360.
So now someone comes in and says, "I'm going to sell Tesla stock." "and they buy Tesla shares. Okay, fine. Now there is a $5 spread between what they paid you for $350 on the market order and what they bought it for 355. So they made a $5 profit . Okay, so how does Robinhood make money on warrants? Well, you place that order on Robinhood.
So as a thank you , that $5 Citadel will provide what's called a rebate, and they might provide, say, $2 to Robinhood as a thank you for paying for the order flow. And they will keep $3 for themselves. In fact, instead of it being dollars for truly liquid public stocks, it's probably pennies. So a five-penny spread gives Robinhood two pennies and the market maker three pennies, for example.
The great thing you get with illiquid things like tokenized stocks, options, or cryptocurrencies is that you get very wide spreads. Just look right here at the screen in front of me. Look at Bitcoin. Why is the spread between the buy and sell price $1,500? » Well, it's so the broker can make more money, baby.
But it also trades at a high price in dollars. But, I mean, it's a pretty wide spread, you know? We're talking closer to a 2% spread. That's a lot. You know, in case the 2% spread on Tesla isn't a penny, it's actually going to be $7. The spread on cryptocurrency is almost as wide as this spread we're talking about here on Tesla.
Uh , and so on, in public markets, really liquid markets, spreads are typically very, very low. That's why prediction markets are so wildly popular right now , because when you trade prediction markets, you're usually trading things that would be considered, how to put it, really illiquid. For example, when Jerome Powell comes out, what is the first phrase he will say ?
Good afternoon, okay? Or what would Kevin Warsh say? Good afternoon. OK? So these are deals with really low liquidity relative to the buy and sell price that you're going to... You see, say, Tesla stock, right? Okay, okay. Tokenized exchanges, in my opinion, will have very wide spreads. And this is where we start talking about how Robinhood can make a lot of money where they have n't historically made a lot of money.
So let me try to explain this as clearly as possible. Robinhood currently makes the vast majority of its money in options and cryptocurrencies because that's where their pullbacks will be the greatest. Again , these discounts or kickbacks should not sound illegal, bad, or criminal. It's just what it is.
And actually, you could argue that market makers are like that, and we don't get into black dark pools or anything like that, but you could argue that market makers provide liquidity. They are liquidity providers, therefore market makers. And if they weren't there, you would have a much more volatile market.
If you think about it, there are no market makers in prediction markets, and they are very volatile. They also have lower liquidity. There is more risk for the market maker . So this is...The income now, uh, from the Robinhood portfolio. In 2025, they made 25% of their money on options. What's really interesting is that if I open this sheet, I want you to see the volumes.
Good? These are volumes. See the red numbers at the top? The stock has a value or volume of $1 trillion. Cryptocurrency - $40 billion. Options - $775 million . It's nothing, okay? Trillion, 40 billion, 775 million. The vast majority of the volume actually falls on stocks. But they only earn 300 million.
I mean, it's just, it's a lot . They only earn 7% of their income in 2025 from stocks because the markets are so limited. Here they are... You get tiny pennies. Options have the least volume, but they make the most money because, you know, some random zero day will have a very large spread on the option, a larger discount for Robinhood.
Cryptocurrency, like I just showed you on ...Webull, big spread, 20% money for coming here. So what does this mean for Robinhood? Well, what it really means is that if they can get a portion of, say, 10% of the exchange value of the tokenized stock market for, say, 10 basis points. Robinhood could potentially , based on some estimates we've gathered, Robinhood could potentially double its revenue from equities from $300 million to $600 million.
Because now they are selling shares at a much higher margin. Let me show you this a little differently. And some of them are being evaluated because we don't have all the transparency yet. And Robinhood doesn't give us everything yet. Uh, and that's okay. That might be to their own advantage, right?
But I want you to see it. Who pays for free deals? These are basic points. So every $100 you trade costs you about...er, sorry, erm 1.4 cents per trade. Who cares? You are going shopping. $100 worth of stock is worth 1.4 cents to you? Nobody gives a damn about it , okay? Back in the days of Scottrade , we paid $7 per trade, right?
It's like you had to make 7% profit on $100 before you just break even on your stupid spending. So the value of the shares became insignificant. This is why Robinhood doesn't make as much money on stocks. They do a huge volume, but they don't make that much money from it. That's where the opportunity lies with tokenized stocks, and that's why Robinhood is growing today.
Look at this. The options earn about 48 cents. Cryptocurrencies earn about 53 cents. In the prediction markets, they make about $20 per $100. So they make most of their money here in the prediction markets, but that's not where most of the volume is yet. But that's why so many people are so excited about prediction markets, because they make money, honey.
You know, exchanges make...a lot of money, and people like it. You know, this is a cool way. You don't need to go to a casino. You don't need to get drunk at the casino or anything like that. You can bet on things that bring you pleasure. Sports, whatever Kevin O'Leary says, whatever, right ? I don't think there's anything wrong with that.
But tokenized stocks, which we just talked about as a big boost for the market, are also a big boost for Robinhood because they will make somewhere between four and eight times more money on tokenized stocks . We don't know. So, this 10 cents per 100 dollars is an estimate. It could be a lot more because remember earlier in the segment we said they got rid of NBBO, National Best Buy Price or Offer.
They got rid of it. So there is no requirement to get the best price. Best price. Spreads are likely to be wide. People who want to grow their cryptocurrencies and actually diversify their stock investments can now not only take a ride on the stock market, but Robinhood can also take a ride on it. So, a direct way to play this tokenization change is Robinhood.
Robinhood is currently trading at about two pegs. I think Robinhood's growth will accelerate significantly compared to the markets' projections because it's a platform that many people already use. But I also think Robinhood has a big P from this change. And personally, I don't think it's surprising that Robinhood is often at the White House.
Yesterday, when I was collecting this data, our stock AI showed that Robinhood had about 9-10% growth. But now the shares have roughly reached the fair value of our stock product, an early version of which you could see in our course. Remember, this is on meetinvest.com. Our terminal is launching in November, which we are very excited about.
Research terminal, data terminal, this will be a lot of fun. But, in any case, I actually think it might be low because it's not yet factored into the price. This money is right here. not in this assessment that I see , because this rule change just happened. People don't have any estimates on this yet.
I actually think this tokenized exchange could boost that by about 20-30%. So if I take 120 and multiply that by, say, 30%, we can get $156 as a fair value for Robinhood. But it's not just a pump for cryptocurrency or a pump for Robinhood, where fewer people have to sell cryptocurrency because now they can leverage against their cryptocurrency in a safer way to buy stocks, but it's also a pump for Robinhood.
So, Robinhood and cryptocurrency are an obvious move. But I personally think this is bullish for the entire stock market. That's potentially hundreds of billions of dollars of liquidity for US stocks that didn't exist before Donald Trump decided his friend Paul Atkins would change the rules. So, as we've already heard in the comments here, uh, what I'm hearing is that the bubble is about to get bigger .
Uh, and when it rains or when... The heavier the rains, the harder the blow. This applies to both sides. Yes. And we are on the side of blowing the bubble. I hope so, why not publicize these things that .
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