Robinhood CEO on Stock Tokenization: Do Issuers Have Consent Rights? How Tokenization Reshapes Global Markets?

Written by: Vlad Tenev, Robinhood CEO

Compiled by: Chopper, Foresight News

All of us, wherever we are, should be able to access quality financial assets. At Robinhood, we have been pushing to make this vision a global reality, starting with U.S. stocks.

More than two months ago, we launched Robinhood stock tokens on Robinhood Chain, giving investors outside the U.S. on-chain exposure to U.S. stocks and ETFs. At the time, we did not anticipate such a strong response to this product.

As adoption has scaled, the questions people care about have shifted in an interesting way: from the basic level of "can we build this kind of product and will anyone use it" to more technical questions: What should the right product architecture be? Do companies have the right to approve or veto the tokenization of their own stock?

This question is especially critical when exploring paths to bring tokenized stocks to the U.S. domestic market, and I have written about it before. Although the benefits of tokenization are becoming increasingly clear to users and regulators, we still need to do more work to demonstrate its value to asset issuers. This should not be hard to achieve, because tokenization can open up a vast global market for issuers' shares, while the potential risks are relatively limited. However, this requires both some adaptation by issuers and market education by tokenization platforms.

The issue of issuer consent rights is highly worth exploring, as it touches the boundary between issuer rights and investor rights. The answer depends on three principles:

• Investor property rights: Shares of public companies are transferable personal property. Holders of freely tradable shares in principle have the right to decide how to hold and dispose of their shares.
• Issuer authority: Companies control the rights attached to the securities they issue, but they do not control all financial products that others develop based on those securities. Unsponsored ADRs, options, and third-party structured products have long reflected this boundary of authority.
• Technology neutrality: Whether issuer consent is required should depend on the rights and obligations created by the product, not on whether the product uses blockchain technology.

This set of criteria is clear in two extreme scenarios. If a product attempts to change the rights attached to the underlying shares, replace the company's official shareholder register, or impose new obligations on the company and its transfer agent, issuer participation must be sought.

If a product merely creates an independent financial instrument that holds or is linked to freely transferable shares, and does not change the issuer's rights, obligations, or authoritative shareholder records, then issuer consent is not required.

There are multiple paths to stock tokenization. Issuers can directly put their own shares on-chain; intermediaries can tokenize ownership of underlying shares; third parties can issue independent instruments backed by or linked to shares. The answer to the issuer consent question depends on which architecture is actually adopted.

Robinhood stock tokens use the third approach. Our goal in designing this product was global expansion: covering multiple jurisdictions, thousands of stocks and ETFs, and in the future extending from public stocks to private equity and other asset classes. Stock tokens are independently issued financial instruments, backed 1:1 by fully reserved underlying shares, providing users with economic exposure without changing the issuer's equity structure or altering the rights attached to the shares themselves.

We chose this architecture so that stock tokens can be promoted globally without requiring every underlying company to restructure its own systems or individually integrate with the product. As before, we can adjust this model in the future as regulatory guidance evolves.

Investors should clearly understand what assets they hold, the corresponding rights, and whether the issuer is involved. We will present this information as clearly as possible through prospectuses, disclosure documents, and product interfaces.

There is also a broader historical lesson worth referencing here.

The paper crunch of the late 1960s overwhelmed the market system that relied on the circulation of physical stock certificates. The solution at the time was stock immobilization and electronic book-entry settlement. This mechanism greatly improved market efficiency and gave rise to today's street name holding system, where registered ownership and beneficial ownership are often separated across multiple layers of intermediaries. (Note: The street name holding system is the current mainstream securities custody mechanism for U.S. stocks, where stocks are uniformly registered in the nominee name of brokers and clearing institutions, and ordinary investors only enjoy actual economic benefit rights.)

Under the technological conditions of that time, this was the optimal solution. But we cannot assume that this is the end point of market infrastructure evolution.

The lesson from this history is that market infrastructure continues to iterate with technology. The system built to accommodate the limitations of paper certificates should not directly determine the rules for asset ownership in the on-chain world. Blockchain can give financial assets greater portability, transparency, and programmability, and investors should have more choices in how they hold and use assets.

Companies should control the rights attached to their own shares, but they cannot control all legal uses of shares once those shares belong to investors. Putting assets on-chain does not mean issuers gain veto rights they did not have off-chain. Issuers certainly cannot block new investor groups from entering simply because they do not yet understand this new technology.