Robinhood plans share redemptions, voting rights for stock tokens, after criticism

Robinhood HOOD$114.35·Market Closed) said it is working to add share redemptions and voting rights to its stock token offering, addressing two sticking points in a growing debate over the brokerage's push to put U.S. equities on blockchain rails.

"In-kind redemption and voting are coming for Robinhood Stock Tokens," CEO Vlad Tenev posted on X on Monday.

Johan Kerbrat, Robinhood's head of crypto, offered more detail. "We're actively working on redemptions for shares 1:1 with voting for eligible Stock Token holders on the roadmap," he said.

The plans followed AMC Entertainment CEO Adam Aron called on Robinhood to stop offering tokens tied to AMC, arguing that the company hadn't approved them and that token holders lacked the rights of shareholders.

Different paths of putting stocks onchain

That debate highlighted an important distinction in the fast-growing tokenized stock market: products carrying a similar ticker can give investors very different rights.

The U.S. Securities and Exchange Commission (SEC), in a January statement, outlined three broad models of tokenization of securities. Companies can tokenize their own securities, preserving the relationship between the issuer and shareholder. A third party can also hold conventional shares in custody and issue tokens representing an ownership interest in them, called a tokenized security entitlement. Meanwhile, some firms issue a separate security that provides synthetic exposure to the underlying stock without giving the token holder ownership of it.

While Robinhood says its Stock Tokens are backed one-for-one with real shares held in custody, they fall into the third, synthetic category.

According to the disclosures, Robinhood’s stock tokens are offered outside the U.S. via a Jersey-domiciled subsidiary and structured as debt instruments. Holders currently get price exposure to the underlying stock but don’t own or have beneficial rights to those shares.

Adding in-kind redemption would let eligible investors exchange a token for the corresponding share. Voting rights are also planned, with Kerbrat pointing to Robinhood's Say shareholder engagement platform as infrastructure the company could draw on.

Meanwhile, Coinbase is also moving to add voting rights to its tokenized stock offerings, CEO Brian Armstrong said on Monday. The crypto exchange’s tokenized equities already support one-for-one redemption into underlying shares and incorporates dividends, he said.