Robinhood CEO: tokenised shares do not require permission from companies

Robinhood CEO Vlad Tenev states that publicly listed companies do not have a veto over the tokenisation of their own shares, as long as the rights attached to those shares do not change. He was responding to a question that is increasingly arising now that the use of Robinhood Stock Tokens is growing: may companies approve or reject the tokenisation of their shares?

In brief:

• Tenev believes that issuers only have a right of consent if the tokenisation changes shareholder rights or imposes new obligations.
• Robinhood Stock Tokens are backed one to one by the underlying shares and do not change the ownership structure.
• According to Tenev, companies must not block new investors simply because they do not understand the technology.

When is consent required?

In his explanation, Tenev makes a clear distinction. Consent from the issuing party is, according to him, required if a tokenised product changes the rights of the underlying shares, replaces the company’s official shareholder register or imposes new obligations on the company or its administrator.

If that is not the case, consent is not required. This concerns an independent financial instrument that is backed by or refers to freely transferable shares, without changing the rights or obligations of the issuing party.

Robinhood Stock Tokens fall outside that boundary

Robinhood launched the Stock Tokens just over two months ago on its own Robinhood Chain. The product gives investors outside the United States access to US stocks and ETFs via the blockchain. Blockchainstories previously wrote about how memecoins and tokenised shares are available together on Robinhood Chain.

According to Tenev, the Stock Tokens fall into the category for which no consent is required. They are backed one to one by the underlying shares and offer economic exposure without changing the ownership structure or the associated shareholder rights.

Tenev argues that putting an asset on the blockchain must not give companies a veto that they do not have in traditional markets either. Companies must not deny new investors access simply because they do not understand the technology behind the product, the Robinhood chief executive said.