Robinhood is working to add two important shareholder features to its tokenized stock products: one-to-one redemption into the underlying shares and voting rights. CEO Vlad Tenev said both features are coming for Robinhood Stock Token holders, while the company’s head of crypto said eligible holders would eventually be able to redeem their tokens for shares and vote. The plans follow criticism over Robinhood’s tokenized AMC offering and wider concerns about whether stock tokens give investors the same rights as conventional shareholders.
https://x.com/vladtenev/status/2099546848558305423?s=20
The debate has highlighted an important question for the growing tokenized-equity market: does a token representing a stock actually give investors ownership rights, or simply exposure to the stock’s price?
Tenev said on Monday that in-kind redemption and voting rights are being developed for Robinhood Stock Tokens.
Johan Kerbrat, Robinhood’s head of crypto, provided more details, saying the company is actively working on one-to-one share redemptions and voting for eligible Stock Token holders.
https://x.com/JohannKerbrat/status/2099518025296994720?s=20
The announcement came after AMC Entertainment CEO Adam Aron criticised Robinhood’s tokenized AMC product. Aron called on Robinhood to stop offering tokens linked to AMC, arguing that the company had not approved the tokens and that holders did not receive the rights normally associated with shareholders.
The dispute has brought attention to a key distinction in tokenized stocks. Two products may carry a similar ticker and track the same company but still provide investors with very different legal and economic rights.
The US Securities and Exchange Commission outlined three broad approaches to tokenising securities in a January statement.
Under one model, a company can tokenize its own securities while maintaining the normal relationship between the issuer and its shareholders.
Another model involves a third party holding traditional shares in custody and issuing tokens that represent an ownership interest in those shares. These are known as tokenized security entitlements.
A third approach involves issuing a separate security that gives investors synthetic exposure to the underlying stock without giving them ownership of the actual shares.
Robinhood’s current Stock Tokens fall into this third category, according to the supplied material.
Robinhood says its Stock Tokens are backed one-for-one by real shares held in custody. However, the tokens are offered outside the US through a Jersey-domiciled subsidiary and are structured as debt instruments.
Under the current arrangement, investors receive price exposure to the underlying stock but do not own the shares or have beneficial shareholder rights.
That is where the proposed changes could become important.
If in-kind redemption is introduced, eligible investors would be able to exchange a Stock Token for the corresponding underlying share. This would give investors a direct route from the blockchain-based product to conventional equity ownership.
Voting rights are also being planned. Kerbrat pointed to Robinhood’s Say shareholder-engagement platform as a possible infrastructure for supporting the voting process.
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