Robinhood CEO rejects issuer's veto power on stock tokens

Robinhood CEO: Public companies should not control third-party stock tokens that have been stripped of shareholder rights

Robinhood CEO Vlad Tenev pointed out that public companies should not have control over third-party stock tokens when the product does not change shareholder rights, issuer obligations, and company records. Tenev said the issuer's consent rights should depend on the nature of the rights created by the token, rather than the blockchain technology it uses.

Robinhood describes a "stock token" as a separate financial instrument backed by freely transferable underlying public shares on a one-to-one basis. Token holders gain economic exposure, but will not directly enter the relevant company's shareholder register. [TAG AMC Entertainment claims it never licensed Robinhood's products and threatens legal and regulatory action. There has been no court or SEC ruling that explicitly determines whether Robinhood's structure requires the consent of the issuer to be invoked.

Tenev's policy test: legal structure rather than technology

Tenev stated in his September 11 post that the issuer's consent should depend on the legal structure of the tokenized product, not whether it uses blockchain technology. The announcement follows AMC Entertainment CEO Adam Aron's public objections to Robinhood's tokens linked to AMC stock.

Robinhood's products are not AMC shares recorded on the blockchain. The company identified its "stock tokens" as debt securities issued by Robinhood Assets (Jersey) Limited. Each instrument provides economic exposure to the reference stock but does not confer any legal or beneficial rights against the company issuing the underlying shares.

Tenev wrote: "A company should control the rights attached to its shares-not every legitimate use of those shares in the hands of investors." He added,"The chain should not give issuers veto power that they never had offline."

Three tokenized stock structures and the SEC's stance

Tenev divides tokenized stocks into three possible structures: one is the company's own issuance of on-chain shares; the other is the ownership of shares held in tokenized custody by intermediaries; and the third is the issuance of independent securities backed or linked by traditional shares by independent companies.

Tenev said issuers should be involved when products change the rights attached to shares, replace their authoritative shareholder books, or create new obligations for the company or its transfer agents. But he believes that consent is not required when independent instruments only cite freely transferable shares.

Robinhood adopts a third third-party model. Its public disclosure documents describe "stock tokens" as debt securities that track underlying equity, but this does not make the token holder a shareholder in the company concerned.

This structure is similar to a type of model recognized by SEC employees. In January this year, three SEC divisions issued a joint statement distinguishing between sponsorship by issuers and products created by unrelated third parties. SEC employees identified custody models and synthetic models in the second category. A third party can issue linked securities that track another company's shares without creating obligations for the founding company and without granting shareholder rights to the token holder.

This statement does not rule on whether issuers must approve such products. According to its disclaimer , this represents the employee's opinion only, has no legal effect, and does not amend federal securities laws.

Stock tokens provide exposure rather than direct shareholding

Robinhood stated that each "stock token" in circulation is backed on a one-to-one basis by the corresponding equity, and the collateral is held by custodian partners located in the United States. Investors hold claims created by the Jersey issuer rather than direct or indirect ownership of the collateral shares.

Therefore, holders of "stock tokens" will not appear on AMC's register of shareholders. They lack voting rights on AMC and are unable to exercise legal rights usually associated with directly or indirectly holding AMC shares.

Robinhood stated that its tokens can be accounted for as dividends through adjustments or distributions specified in the product terms. Company behavior still depends on the terms of the contract set by Robinhood Assets (Jersey), because the token itself does not change AMC's obligations.

Questions remain about the voting rights attached to collateral shares. Robinhood has not publicly explained how its custody arrangements handle votes in support of shares of "stock tokens," where token holders do not have direct voting rights.

As crypto.news pointed out in its report on its investigation of "What do investors in tokenized stocks legally have?" products with similar labels may represent different claims. Some record direct or indirect equity ownership, while others provide contractual price exposure through independent issuers.

Risk warnings and geographical restrictions

Robinhood's disclosure warns that "stock tokens" are highly risky and may cause the holder to suffer complete losses. These securities are not registered under U.S. Securities Act and may not be offered, sold, or delivered within the United States or for the benefit of Americans. Restrictions also cover several other jurisdictions, including Canada, the United Kingdom and Switzerland.

AMC challenges Robinhood's use of its shares

Aron said on September 4 that AMC had no connection with Robinhood's tokens and neither authorized nor recognized the product. He questioned whether the structure would confuse investors 'perceptions of their rights and affect the company's ability to raise funds through official securities.

Subsequently, AMC CEO asked Robinhood to stop providing the token. He said AMC's securities lawyers will review possible legal action and plan to raise concerns with the SEC.

Dan Gallagher, Robinhood's chief legal officer, publicly rejected the request. Tenev then defended the model in an interview with CNBC on September 9, arguing that public companies control their own securities but not every individual product built around them.

His subsequent post proposed a more detailed policy test. Tenev compared the stand-alone tokenization instrument to American Depositary Receipts (ADRs) that are not sponsored , options, and structured products that can be quoted as publicly traded shares without changing the issuer's stock.

AMC's position was disputed by Robinhood. As of September 14, there was no public court ruling determining whether Robinhood needed AMC approval, nor had any SEC enforcement action been announced against AMC tokens.

U.S. tokenized stock rules are still developing

Robinhood launched a new generation of "stock tokens" outside the United States through Robinhood Chain in July this year. Tenev said the company chose a separate offering structure to support multiple stocks and exchange-traded funds (ETFs) without requiring each cited company to rebuild the system.

The SEC's January classification law confirmed that federal securities analysis depends on the rights and obligations created by each product. Employees said that under economic terms, third-party linked securities could be debt instruments, equity securities or security-based swaps.

Another proposal released by the SEC in September aims to modernize transfer agent rules and allow blockchain systems to support securities records. According to reports, the SEC's tokenized stock proposal focuses on authoritative registers and will not automatically convert tokens into legal shares.

Tenev said Robinhood hopes to bring tokenized stocks to U.S. investors, but current "stock tokens" are still offshore products. He said companies may revise their structure as regulators issue new guidelines.

However, as of September 14, AMC had not announced a lawsuit. The SEC also did not disclose a formal investigation or a public response to Aron's threat reports.