Robinhood To Offer Share Redemptions And Voting Rights On Tokenized Stocks

Robinhood To Offer Share Redemptions And Voting Rights On Tokenized Stocks

• HOOD35566-USD
• HOOD
• AMC
• COIN

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Online brokerage Robinhood Markets (NASDAQ: $HOOD) says that it will offer share redemptions and voting rights on tokenized stocks.

The move comes as Robinhood faces mounting criticism over its plans to put U.S. stocks on blockchain rails.

"In-kind redemption and voting are coming for Robinhood Stock Tokens," said Robinhood CEO Vlad Tenev in a social media post on Sept. 14.

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The company later provided more detail, saying in a statement: "We're actively working on redemptions for shares 1:1 with voting for eligible Stock Token holders…"

Robinhood has come under fire from movie theatre chain AMC Entertainment (NYSE: $AMC), which has called on the brokerage to stop offering a tokenized version of its stock.

AMC has said that it hasn't approved the tokenized version of its stock being offered by Robinhood and that token holders lack the rights of other shareholders.

One of the concerns about tokenized, or digital versions, of stocks is that they lack the rights given to traditional shareholders.

The U.S. Securities and Exchange Commission (SEC) has said that companies can tokenize their own stocks, preserving the relationship between the issuer and shareholder. But so far, few companies have done so.

While Robinhood says its stock tokens are backed one-for-one with real shares held in custody, they fall into the category of "synthetic securities."

Providing in-kind redemptions would let investors exchange a tokenized stock for a corresponding share.

Voting rights should help to ease concerns among investors and give holders of tokenized stocks that same rights as other shareholders.

Crypto exchange Coinbase Global (NASDAQ: $COIN) is also adding voting rights to its tokenized stock offerings.

Coinbase's tokenized equities already support one-for-one redemptions with traditional shares.

HOOD stock is flat over the last 12 months (down 0.44%) and trading at $114.33 U.S. per share.