Robinhood (NASDAQ:HOOD) CEO Vlad Tenev spoke with CNBC this morning after reports that AMC (NYSE: AMC) is unhappy about Robinhood tokenizing its shares and offering them worldwide. AMC CEO Adam Aron said he was unaware his shares were being tokenized, then described the practice as “vile,” “contemptible,” and “inexcusable.” Aron asked how the process could be legal.
Tokenization can refer to a security being digitized in a wrapper, which is what Robinhood is doing. Eventually, it is anticipated that all securities will become digital, and tokenization or digital securities will be the norm – without a wrapper. Regulators are currently working on direct tokenization of shares.
Tenev said that by tokenizing US securities, they are providing broader access to the world to invest in US shares. These securities are often made available in countries with little to no access to US markets.
He said the offering is not without precedent, like an ETF, and each tokenized product is backed by a one-to-one share.
“A lot of people do not understand how this works,” said Tenev, alluding to the fact that more investors in a company like AMC is not a bad thing.
Tenev said they have iterated on tokenized securities quite a bit since launching in Europe last year, and the product’s popularity has grown dramatically.
” The entire industry is heading in this direction.”
While investors in the current tokenized product do gain access to dividends, they do not gain voting rights like a normal shareholder. Tenev struggled to explain how it manages shareholding votes with its tokenized shares.
