Finance14 September, 20263 min read
Robinhood CEO Vlad Tenev Rejects Issuer Veto Over Tokenized Stock Products
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Issuers should not veto tokenized stock products that do not alter shareholder rights. Issuers must be involved if tokenized products change rights or company obligations.
Veto Debate
Robinhood CEO Vlad Tenev rejected an issuer veto over Robinhood’s tokenized stock products, arguing that public companies should not control third-party stock tokens when the products leave shareholder rights, issuer obligations and corporate records unchanged.
In a Sept. 11 post, Tenev said issuer consent should depend on the legal structure of a tokenized product, not its use of blockchain technology, and he argued that "going onchain shouldn’t give the issuer a veto it never had offchain."
Tenev said issuer participation should be required when a tokenized product changes the rights attached to a company’s stock, replaces its authoritative shareholder ledger, or creates new duties for the company or its transfer agent.
Robinhood describes its Stock Tokens as debt securities issued by Robinhood Assets (Jersey) Limited, with each instrument providing economic exposure to a referenced stock while granting no legal or beneficial rights against the company that issued the underlying shares.
The dispute intensified after AMC Entertainment CEO Adam Aron publicly objected to a Robinhood token linked to AMC shares on Sept. 4, saying AMC had no affiliation with the product and threatened legal and regulatory action.
AMC Pushback
AMC said it never authorized Robinhood’s product and threatened legal and regulatory action against it, while Robinhood said its product is not an AMC share recorded on a blockchain.
Adam Aron said on Sept. 4 that AMC had no affiliation with Robinhood’s token and had neither authorized nor endorsed the product, and he questioned whether the structure could confuse investors about their rights and affect the company’s ability to raise capital through official securities.
Robinhood’s disclosures say Stock Token holders receive economic exposure but do not enter the referenced company’s shareholder register directly, and they lack voting rights against AMC.
Robinhood also said its tokens can account for dividends through adjustments or distributions specified in the product terms, while corporate actions remain dependent on the contractual terms set by Robinhood Assets (Jersey).
The company’s position left questions over voting power attached to collateral shares, because Robinhood has not publicly explained how its custody arrangement handles votes for shares supporting Stock Tokens, while token holders have no direct voting authority.
Regulatory and Risk
The issuer-consent debate sits alongside guidance from the Securities and Exchange Commission’s staff, where in January three SEC divisions published a joint statement separating issuer-sponsored tokenized securities from products created by unaffiliated third parties.
“The statement did not decide whether an issuer must approve such a product.”
That SEC staff statement identified custodial and synthetic models within the second category, and it said the statement did not decide whether an issuer must approve such a product, while carrying no legal force and not amending federal securities law.
Robinhood said its Stock Tokens are backed one-for-one by the corresponding equity, with the collateral held by a U.S.-based custody partner, and investors hold a claim created by the Jersey issuer rather than direct ownership of the collateral share.
Robinhood’s disclosures warn that Stock Tokens carry a high level of risk and may expose holders to a complete loss, and the securities are not registered under U.S. securities laws and cannot be offered, sold or delivered in the United States or for the benefit of U.S. persons.
The restrictions cover several other jurisdictions, including Canada, the United Kingdom and Switzerland, as the dispute over issuer consent continues after Aron’s Sept. 4 objections and Tenev’s Sept. 11 response.