Opinion | By Aaron Kaplan, founder of Promethum

U.S. markets are the envy of the world because investors trust that whoever owns a share owns it fully. Synthetic tokenization models cheapen that trust, shortchange U.S. investors, and undercut the issuer-led capital markets model.

Five years ago, Robinhood and AMC were the faces of the meme-stock era, the 2021 retail trading frenzy that turned a commission-free brokerage app and a movie-theater chain into market-moving household names. Today, their chief executives are locked in a public feud over tokenized stocks — blockchain-based instruments that represent, or claim to represent, shares of a company.

AMC CEO Adam Aron says Robinhood tokenized AMC’s stock without consent and has called the product “vile.” Robinhood CEO Vlad Tenev has responded that consent is not required and that his firm is merely meeting international demand for U.S. equity exposure.

The disputed products are debt securities issued by a Robinhood offshore subsidiary — what Aron describes as a “fitious synthetic equity market.” The tokens track a stock’s price but give buyers no ownership of the underlying shares. The industry calls these synthetic products “wrappers.”

Beyond the feud, Tenev correctly recognizes a massive opportunity: giving millions of underserved international investors access to U.S. equities markets. The United States has a population of roughly 340 million people, and the number of individual investors living outside the U.S. is at least that large — yet the overwhelming majority of them cannot buy into U.S. markets directly or affordably. Expand access through tokenization, and global investment will flow into American companies. This expanded pool of investment capital represents the biggest opportunity American markets have had in more than fifty years.

But the firms offering these synthetic securities see this once-in-a-generation opportunity as their own, inserting themselves between international investors and U.S. markets to capture the trading activity, liquidity, and fees that global demand for U.S. stocks creates.

Put more bluntly: synthetic tokenization of U.S. equities shortchanges the American public.

A wrapper touches the U.S. capital markets only once — when the issuer buys shares to hold as collateral. From then on, trading happens offshore, token holder to token holder, and none of it reaches the exchanges where the company’s shares trade. The result is misdirected investor demand in a U.S. company that does not reflect a genuine increase in that company’s market capitalization. Multiply that mismatch across the nearly 200 U.S. companies already tokenized this way, in a market Citi projects at $2.7 trillion by 2030, and the opportunity cost to American companies and portfolios potentially compounds.

On September 17, the SEC drew the line. Its long-awaited “innovation exemption,” which lets blockchain venues list and trade tokenized securities, excludes synthetic tokens outright. Qualifying tokens must represent real ownership and, in Chairman Paul Atkins’ words, they “must provide holders with the same rights and privileges as the traditional securities” — dividends and voting included. The innovation exemption even addresses AMC’s concerns by requiring that companies receive notice and the right to object before a third party tokenizes their shares.

The better model is not a whitepaper or a promise; it is already being built at the very center of U.S. markets. A share can be tokenized as a digital twin of a security custodied at the Depository Trust Company, a subsidiary of the Depository Trust & Clearing Corporation (DTCC) and the custodian of virtually every publicly traded U.S. share. Under the tokenization service the DTCC plans to launch this year, the token and the traditional security are one asset in two forms; the share never leaves the national clearing and settlement system. A foreign investor who buys that token through a licensed venue buys the share itself, and the order deepens the market Americans trade in.

Real shares. Real rights. Real markets.

The digital twin does what the wrapper cannot: it extends full ownership to millions of potential new investors and directly connects American companies with increased access to capital.

Global investors will invest in U.S. equities one way or another. Done right, tokenization will galvanize American capital markets — markets that can trade around the clock, settle more efficiently, and remain the deepest and most trusted in the world — and create a generational influx of investment into America. The near-term markers are concrete: the DTCC’s tokenization service, slated to launch this year, and the practical application of the exemption’s ownership, notice, and objection requirements are the developments to watch as this debate moves from principle to practice.

The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.