The U.S. Securities and Exchange Commission issued a five‑year exemption on Sept. 17 that permits on‑chain trading of tokenized U.S. stocks only when the token carries the same dividends, voting and class rights as the underlying share. Synthetic exposure, such as Robinhood’s tokenized AMC shares, is excluded.
Across seven trading sessions from Aug. 31 to Sept. 9, Robinhood’s AMC token traded within a median deviation of 0.87% and a maximum of 2.71% from AMC’s NYSE close, measured in the Uniswap pool that handles roughly 95% of its volume. While the NYSE was open, the token’s price stayed closely aligned.
When the exchange was closed, the token’s price decoupled. On the night of Sept. 3, the token rose from $2.55 to $23.16 – nine times the $2.54 closing price of AMC – before falling to $3.26 within the same hour, with $10.5 million of pool volume. On‑chain data show 47 token mints on Sept. 4, all between noon and 7 p.m. ET, after the price spike had already begun to revert.
Wrapped tokens like Robinhood’s are typically backed by offshore issuers that collateralize the tokens with the underlying shares. In theory, a 1:1 match should keep prices aligned, but in practice the two instruments trade separately, creating arbitrage opportunities for high‑frequency firms and market‑making desks. In Robinhood’s case, the Jersey‑based issuer authorizes only one participant to create and redeem tokens. That participant did not mint or burn tokens during the spike, leaving the market to rely on directional bets rather than arbitrage.
The SEC’s exemption also limits on‑chain trading to 0.25% of a large‑cap stock’s average daily volume and 2.5% for other listed stocks. Tokens issued offshore to non‑U.S. holders, including Robinhood’s, fall outside the SEC’s jurisdiction and continue operating under existing rules.
Wrapped tokens have practical utility in markets where access to U.S. equities is restricted. Robinhood’s “stock tokens” cover more than 190 companies in 120 countries, while platforms such as xStocks and Ondo use similar structures without requiring issuer consent or shareholder‑register entry. This broader reach comes with counter‑party risk, as holders rely on the offshore issuer’s ability to source the underlying shares, especially when primary exchanges are closed.
Issuer‑sponsored tokens (ISTs) represent a different model: the token directly reflects the registered share, with the issuer and its transfer agent involved in each transaction. ISTs retain voting rights and corporate actions, eliminating conversion risk between separate instruments. However, IST liquidity remains thin; only a handful of tokens, such as Bullish’s BLSH, trade regularly.
The debate sparked by Robinhood’s AMC token highlights two challenges: determining which tokenization model complies with securities law, and building a liquid market that functions beyond issuance. Wrapped tokens offer broader distribution but suffer from price dislocations when markets are closed. ISTs provide a more secure claim on the underlying share but lack the same global reach. A combined approach—running both models concurrently—could deliver 24/7 price discovery while preserving regulatory integrity.
