Robinhood CEO Vlad Tenev says public companies should not have the power to block third-party stock tokens when those products do not change shareholder rights, company obligations, or official shareholder records.
Tenev made the argument after AMC Entertainment CEO Adam Aron criticized Robinhood over a token linked to AMC shares. Tenev said whether a company needs to approve a token should depend on the legal rights created by the product, not simply on whether blockchain technology is being used.
Robinhood says its Stock Tokens are separate securities issued by Robinhood Assets (Jersey) Limited. Each token is backed one-for-one by the related stock and gives investors economic exposure to its price, but it does not give them direct ownership rights in the company.
Under this structure, token holders are not listed as shareholders of the referenced company. They do not receive direct voting rights or other legal rights normally connected to owning the actual shares.
Tenev said companies should control the rights attached to their own shares, but should not automatically control every legal product created using shares that investors can freely trade.
He described three possible models for tokenized stocks. A company can issue its own shares on a blockchain, an intermediary can tokenize shares held in custody, or a separate company can issue a security that tracks traditional shares.
According to Tenev, company approval should be needed when a token changes shareholder rights, replaces the official shareholder record, or creates new obligations for the company or its transfer agent. He argues that approval should not be necessary when a separate security simply tracks freely transferable shares.
Robinhood uses this third-party structure. Its disclosures describe Stock Tokens as debt securities that track traditional stocks without making token holders shareholders of those companies.
The Securities and Exchange Commission has also recognized different structures for tokenized securities. In January, SEC staff separated company-issued tokenized securities from products created by independent third parties. However, the SEC statement did not decide whether companies must approve third-party tokenized products and does not have the force of law.
Robinhood says each Stock Token is backed one-for-one by the corresponding stock, with the underlying shares held by a U.S.-based custody partner. Investors, however, hold a contractual claim against the token issuer rather than direct ownership of the underlying shares.
Because of this structure, token holders do not appear on AMC’s shareholder register and cannot vote directly at AMC meetings. Robinhood says dividends can be handled through adjustments or distributions under the terms of each token.
There are still questions about how voting rights attached to the underlying shares are handled. Robinhood has not publicly explained how votes are managed for shares held as collateral for its Stock Tokens.
AMC has strongly challenged Robinhood’s approach. On September 4, CEO Adam Aron said AMC had no connection with the token and had not authorized or endorsed it. He also raised concerns that the product could confuse investors about their rights and potentially affect AMC’s ability to raise capital.
Aron later demanded that Robinhood stop offering the token and said AMC’s lawyers would consider legal action and raise the issue with the SEC.
Robinhood’s chief legal officer Dan Gallagher rejected the demand, while Tenev defended the product in a CNBC interview. Tenev compared the structure to other financial products, such as unsponsored American depositary receipts, options and structured products that can reference publicly traded shares without changing the company’s own securities.
As of September 14, no publicly identified court ruling had determined whether Robinhood needed AMC’s approval. The SEC had also not announced an enforcement action or formal investigation related to the AMC token.
Robinhood launched its latest Stock Token products outside the United States through Robinhood Chain in July. Tenev said the separate-security structure allows the company to support many stocks and ETFs without requiring every company involved to change its own systems.
The SEC continues to develop its approach to tokenized securities. A January SEC staff statement and a separate September proposal show that regulators are focusing heavily on the legal rights, obligations and official records created by each tokenized product.
Tenev said Robinhood wants to eventually offer tokenized stocks to U.S. investors, but its current Stock Tokens remain offshore products. He also said the company could change its structure as regulators provide clearer guidance.
For now, the dispute between Robinhood and AMC highlights a larger question for the tokenized-stock market: whether companies should have approval rights over independent blockchain-based products that track their shares without giving investors direct ownership of those shares.
