robin hood CEO Vlad Tenev defended his company’s foray into tokenized stocks on Wednesday, saying public companies cannot control financial products built around their stocks once they go public. AMC He recently criticized Robinhood’s tokenization efforts.
Tokenization is the process of issuing publicly traded securities, real-world assets, or other forms of digital representation of value on a blockchain network. The owner of a tokenized asset does not have full ownership of the asset itself.
Tenev spoke about Robinhood’s tokenization efforts as a technology-neutral financial wrapper for publicly traded stocks. He told CNBC’s “Squawk Box” that once a company’s shares go public, shareholders own transferable assets and other financial institutions should be able to create products that reference those shares without seeking permission from the issuer.
“Issuers should, and do, control the rights and obligations of the shares they issue, but that doesn’t mean they control everything,” he said. “In particular, we do not control other companies that issue their own securities that reference those shares.”
He added: “Issuer consent depends on exactly what you are trying to do. In the case of Robinhood stock tokens, which are tokenized securities issued by another entity backed by underlying stock, they should not automatically require issuer consent.”
The comments came on the heels of AMC CEO Adam Aron’s harsh criticism of Robinhood’s tokenized stocks, including tokenized AMC stock. Aaron said the increasingly common practice of tokenization allows brokerages to create exposure to AMC stock without the involvement of the issuing company, undermining the traditional relationship between companies and shareholders.
Tenev acknowledged that, unlike common shareholders, holders of equity tokens do not receive voting rights in the underlying company. The tokens are structured as bonds backed by the underlying stocks, but Tenev also declined to say how Robinhood plans to exercise the voting rights attached to these stocks.
Asked if Robinhood would vote these underlying shares, he said the company “hasn’t really announced any plans on the voting side.”
