The Securities and Exchange Commission issued guidance on Sept. 17, granting a five-year exemption for tokenized U.S. stock to trade onchain. This exemption applies only where the token carries identical dividends, votes and class rights as the underlying share. The SEC explicitly excluded synthetic exposure, such as Robinhood's tokenized stock, from this framework.
This regulatory decision follows a public dispute between AMC CEO Adam Aron and Robinhood CEO Vlad Tenev regarding the legitimacy of tokenized shares. Aron characterized Robinhood's tokenized AMC shares as a "quasi-fake market" and threatened legal action. Tenev said a public company does not possess the authority to approve every product built on its stock.
The central argument has revolved around which tokenization model holds legitimacy. One model involves a wrapped token, structured as a claim on an underlying share—the design Robinhood employs. The alternative is an issuer-sponsored token, which registers directly with a transfer agent.
Robinhood's AMC token, traded primarily in a Uniswap pool handling approximately 95 percent of its volume, demonstrated price alignment during standard market hours. Across seven sessions between Aug. 31 and Sept. 9, the token's closing price remained within 0.87 percent of AMC's NYSE close at the median. The widest divergence recorded during these periods was 2.71 percent.
A contrasting scenario emerged when the underlying market was closed. Leading up to midnight on Thursday, Sept. 3, the Robinhood AMC token surged from $2.55 to $23.16—a nine-fold increase from AMC's $2.54 NYSE closing price seven hours earlier. The token then dropped back to $3.26 within the same hour, with the Uniswap pool recording $10.5 million in volume during that hour.
Wrapped tokens typically function as claims against offshore issuers who collateralize the tokens with corresponding underlying shares. Theoretically, a 1:1 match between the underlying stock positions and the claims should maintain price alignment. In practice, these two instruments trade separately, allowing for potential price divergence.
Arbitrageurs, including high-frequency trading firms and market-making desks, usually intervene to correct such dislocations. These participants capitalize on price discrepancies, locking in profits while bringing the token price back in line with the underlying asset. This same mechanism keeps depositary receipts and exchange-traded funds aligned with their net asset values.
Robinhood's AMC token's structure, however, presented a critical limitation. Its Jersey-based issuer designated only one authorized participant capable of creating and redeeming tokens. Despite the Sept. 3 price spike occurring within the hours this participant was permitted to operate, no tokens were minted or burned at that time.
Onchain data from Sept. 4 revealed 47 minting events, all occurring between noon and 7 p.m. ET. These actions took place during the cash trading session, but critically, half a day after the token had already depegged from its underlying share and subsequently recovered. This delayed activity highlights the absence of real-time arbitrage.
The lack of an efficient arbitrage mechanism stemmed from the inability to borrow tokens. In a typical market, a dealer can sell short or from their inventory to capture a premium. For Robinhood's token, the only method to acquire new tokens involved pre-funding with the issuer, which required buying the underlying share first.
If the NYSE was closed, a broker could not purchase the underlying AMC shares to facilitate this pre-funding. Even with an open market, hedging this exposure costs capital. The potential premium is capped by how much the onchain pool can absorb, transforming what should be an arbitrage opportunity into a proprietary bet with the firm's own capital.
Tram Doman of Bullish argues the debate now focuses on the fundamental requirements for any tokenized stock offering to genuinely function as a market. The SEC's recent guidance draws a clear line, separating issuer-backed tokens with full rights from synthetic claims that have shown susceptibility to significant price dislocations.
