Robinhood’s Vlad Tenev Makes A Point For DeFi Unintentionally

Robinhood’s Vlad Tenev, the CEO of the company, believes that the real-time settlements are able to solve cash flow problems which sounds like blockchain-based DeFi space. This is weird coming from the person that got the entire crypto industry mad at him so let’s read more in our latest crypto news.

Robinhood decided to stop trading for certain stocks because of cash flow issues. Robinhood’s Vlad Tenev called for real-time settlements to address the problem which is what decentralized finance does. The trading app halted users from purchasing popular stocks like AMC and GameStop and then Reddit traders boosted up the trading volumes and prices hit new highs. Tenev wants consumers to know that he was upset about the stoppage as the traders were.

It’s time for T+2 to go. (1/9)

— VLAD (@vladtenev) February 2, 2021

In a blog post today named “It’s Time for Real-Time Settlement”, Tenev proposed a new change in the industry regulations that will allow securities traders to settle right away which means more money will change hands in a few minutes rather than in days. He never mentioned decentralized finance or blockchain technology which is exactly what this technology does:

 “There is no reason why the greatest financial system the world has ever seen cannot settle trades in real time.”

He found faults with the securities clearinghouse system which is basically an intermediary that matches buyers to sellers, finalized trades, and collects payments. The current system is overseen by the Securities and Exchange Commission and the privacy Depository Trust as the Cleaning corporation and requires a two-day settlement time:

 “Investors are left waiting for their trades to clear, and the clearing brokers have their proprietary cash locked up, until the settlement is final days after the trade. The clearinghouse deposit requirements are designed to mitigate risk, but last week’s wild market activity showed that these requirements, coupled with an unnecessarily long settlement cycle, can have unintended consequences that introduce new risks.”

Blockchain-based decentralized finance apps are able to settle trades quickly and as the founder of Fulcrum Tom Bean said:

“Decentralized exchanges on Ethereum, like Uniswap and SushiSwap can’t be censored, and settlement can occur as quickly as a block can be mined (about 13 seconds). Recent events show the need to modernize the antiquated technology and processes in place in traditional financial markets. TradFi is just playing catchup to what DeFi solved a long time ago.”