SEC Approves On‑Chain Stock Tokens, Bars Synthetic Versions

The U.S. Securities and Exchange Commission issued an order that permits on‑chain trading of tokenized stocks while prohibiting synthetic token versions. The ruling also requires venues to notify issuers and allow them to object to token listings.

Background and Company Reactions

AMC’s chief executive publicly condemned Robinhood’s tokenized‑stock program, describing it with a series of negative adjectives and questioning its legality. Robinhood had extended tokenized stocks to AMC and more than 190 other companies through its Robinhood Assets Limited platform, despite those firms not signing on to the arrangement.

SEC Conditions for Token Listings

• Tokens must grant holders the same rights and privileges as the underlying ordinary shares.
• Before a token created by an outside firm can be listed, the venue must notify the issuing company and allow it to object.
• Only approved participants may trade the tokens, even though the smart contracts run on public blockchains.
• Symbol counts and trading volumes are capped, and on‑chain trading halts if the underlying share is halted.
• Trading data—including price, size, time and daily volume—must be published at set intervals.
• The exemption lasts for five years, after which venues must seek further approval.

Robinhood’s Response

Robinhood announced that it will offer voting rights and redemption options for its tokens. The company highlighted benefits such as instant settlement, 24/7 trading and default fractionalization, and welcomed the SEC’s “innovation exemption” as a step toward developing liquid tokenized securities markets in the United States.

Regulatory Outlook

The SEC described the measure as a significant step toward modernizing capital markets. It indicated that the current exemption is temporary and that permanent rules will follow after a public comment period.