Five years ago, Robinhood and AMC were the faces of the meme-stock era; now their CEOs are at war with each other over tokenized stocks — blockchain-based instruments that represent, or claim to represent, shares of a company. Adam Aron, AMC’s CEO, says Robinhood tokenized AMC’s stock without consent and called the product “vile.” Vlad Tenev responded that consent is not required and Robinhood is merely meeting international demand for U.S. equity exposure.
The disputed products are debt securities issued by a Robinhood offshore subsidiary — what Aron calls a “fictitious synthetic equity market.” The tokens track a stock's price but give buyers no ownership of the underlying shares. The industry calls these synthetic products "wrappers."
Beyond their kerfuffle, Tenev correctly recognizes a massive opportunity: giving millions of underserved international investors access to U.S. equities markets. The United States has a population of roughly 340 million people. The number of individual investors living outside of the U.S. is at least that number, but the overwhelming majority of them cannot buy into U.S. markets directly or affordably. Expand access through tokenization, and global investment will flow into American companies. This expanded pool of investment capital represents the biggest opportunity American markets have had in over fifty years.
But firms offering these synthetic securities see this once-in-a-generation opportunity as their own, inserting themselves between international investors and U.S. markets to capture the trading activity, liquidity, and fees that global demand for U.S. stocks creates.
Put more bluntly: Synthetic tokenization of U.S. equities shortchanges the American public.
A wrapper touches the U.S. capital markets only once, when the issuer buys shares to hold as collateral. From then on, the trading happens offshore, token holder to token holder, and none of it reaches the exchanges where the company's shares trade. The result is misdirected investor demand in a U.S. company that does not reflect a genuine increase in the market capitalization of that company. Multiply that mismatch across nearly 200 U.S. companies already tokenized this way, in a market Citi projects at $2.7 trillion by 2030, and the opportunity cost to American companies and portfolios potentially compounds.