Robinhood is reportedly developing a blockchain network that will enable retail investors in Europe to trade US securities.

According to a May 7 Bloomberg report citing sources familiar with the matter, the move seeks to expand the company's local presence by offering trading of tokenized securities, such as stocks.

According to a May 7 report by Bloomberg, brokerage fintech firm, Robinhood (NASDAQ:HOOD), is developing a blockchain network that will allow retail investors in Europe to trade US securities.

The move is part of efforts to expand its local presence by offering trading of tokenized securities, such as stocks, the report notes, citing sources familiar with the matter. Two crypto firms, Arbitrum and the Solana Foundation, are reportedly in the running to become partners in the project.

Tokenization is the process of turning real-world assets, like stocks, real estate, or commodities, into digital tokens that can be recorded and traded on a decentralized ledger, known as a blockchain.

Tokenizing securities instead of providing direct exposure can offer several advantages: reduced costs by eliminating traditional financial infrastructure, enhanced accessibility, faster settlement times, and quicker transactions. More brokerages and investment firms are exploring asset tokenization. For example, investment giant Andreessen Horowitz (a.k.a A16z) is reportedly planning to launch a new firm focused on blockchain and crypto startups.

Earlier this year, the brokerage firm secured a brokerage license in Lithuania, allowing it to provide investment services across the European Union. The firm has also completed an agreement to buy crypto exchange Bitstamp.

“You can sit down in front of some software, create a coin and have it be trading in 5 minutes ... That’s a scary thing,” said copy of a statement made by Robinhood CEO Vladimir Tenev in a recent interview. “It’s also an incredibly powerful thing if you juxtapose it with how cumbersome the IPO process is.”

The company’s shares rose 2.7% by 7:07 AM ET (11:07 GMT) on Sunday. The company’s revenue fell 8.6% in the first quarter, but it still managed to beat analysts’ estimates.

The brokerage firm has yet to reach an agreement with either Arbitrum or Solana for the project, while all three parties declined to comment on the matter, Bloomberg reports.

Meanwhile, more traditional financial firms are exploring blockchain-based solutions. In May 2018, Banco Santander became the first company to use a blockchain for investor voting, while US giant JP Morgan has created its blockchain platform called Onyx.