SEC Blocks Synthetic Tokenization, Favors Real Ownership

The CEO of AMC, Adam Aron, has criticized Robinhood for tokenizing AMC's stock without consent, calling the product 'vile.'

Tokenized stocks are blockchain-based instruments that represent, or claim to represent, shares of a company.

Robinhood's tokenized AMC stock is a debt security issued by a Robinhood offshore subsidiary, which tracks a stock's price but gives buyers no ownership of the underlying shares.

The SEC has recently drawn a line by excluding synthetic tokens outright from its long-awaited 'innovation exemption.'

The exemption requires qualifying tokens to represent real ownership and provide holders with the same rights and privileges as traditional securities, including dividends and voting.

The Depository Trust Company is planning to launch a tokenization service that will allow foreign investors to buy tokens that represent real shares of U.S. companies.

This service will ensure that foreign investors buy the actual shares, deepening the market that American investors trade in.