AMC Chief Executive Officer Adam Aron labeled Robinhood’s tokenized versions of AMC shares a pseudo-fake market and threatened legal action. Conversely, Robinhood executive Vlad Tenev fired back, arguing that a publicly traded firm lacks the authority to veto any offering created around its equity.
Following their public dispute, a wider debate concerning which category of token is genuine has surfaced: a wrapped variant, representing a claim on the underlying security, or an issuer-approved token formally registered with the transfer agent. On September 17, the SEC released its perspective, delivering a five-year exemption enabling tokenized U.S. equities to trade onchain domestically strictly when the token includes identical dividend, voting, and class privileges as the underlying share. Synthetic derivatives like Robinhood’s stock tokens remain omitted.
The AMC Token on Robinhood
Throughout seven trading periods spanning August 31 to September 9, Robinhood’s AMC token stayed within 0.87% of AMC’s New York Stock Exchange closing value at the median, and 2.71% at its broadest divergence, evaluated inside the Uniswap liquidity pool holding roughly 95% of its volume. When the underlying traditional market operates, pricing stays relatively consistent.
Conversely, a distinct scenario materializes when the traditional market shuts down. Nearing midnight on Thursday, September 3, Robinhood’s AMC token surged from $2.55 to reach $23.16—representing nine times the $2.54 close recorded by AMC on the NYSE seven hours prior—before tumbling back down to $3.26 inside that exact timeframe. Trading volume through the liquidity pool during that hour totaled $10.5 million.
Wrapped instruments like Robinhood’s AMC offering are routinely designed as claims against offshore entities, which back the tokens utilizing the underlying equities. In theory, if the issuer guarantees a strict one-to-one correspondence between underlying stock holdings and claims, valuations ought to match, yet in reality, these two assets trade separately and can decouple. Arbitrage operators, including high-frequency trading shops and market-making desks, normally intervene to restore price equilibrium, capture arbitrage gains, and eliminate pricing gaps. This identical mechanism maintains parity between depositary receipts and their base shares, alongside ETFs and their net asset valuations.
Within Robinhood’s framework, however, the Jersey-based issuer identifies merely a single authorized participant capable of performing creations and redemptions. The price surge occurred squarely during hours when this action was permitted, yet the participant executed no minting or burning operations at that time. Blockchain telemetry indicates 47 minting events on Friday, September 4, every single one occurring between noon and 7 p.m. Eastern Time, safely inside regular cash hours, roughly half a day after the token had broken its peg and subsequently rebounded.
In a healthy market, a dealer can initiate short positions or draw from personal inventory to harvest premiums and replenish holdings later. Lacking any infrastructure to borrow tokens, the sole avenue to acquire fresh units involves pre-funding with the issuer. This necessitates purchasing the share beforehand, but if the NYSE is closed, the broker would have been forced to buy prior to the closing bell. Hedging such exposure demands capital for a premium capped entirely by the absorption capacity of the onchain liquidity pool. It functions as a proprietary wager utilizing the enterprise’s balance sheet rather than true arbitrage.
At the issuer level, minting tokens without holding actual shares forces the entity to incur liabilities for unacquired equities, sustaining risk on its proprietary ledger until market open, which remains unacceptable for an asset distributed under the premise of complete backing. Consequently, the selling pressure that erased the price spike originated from holders securing profits. Financial capital circulated exclusively inside the token ecosystem; zero actual shares changed hands. No arbitrage occurred; all participants engaged in directional speculation risking their own capital.
None of these activities tied back to the fundamental AMC equity. Hours after Aron published his statements, a memecoin debuted, priced using tokenized AMC units. As buying pressure for the meme asset accelerated, the liquidity pool liquidated AMC tokens to purchase it, dragging the stock token’s valuation alongside it. An asset engineered to track shares in a cinema operator derived its price from demand for a memecoin. Every downstream beneficiary of that pricing metric inherited a figure produced by disconnected speculation.
To curtail the impact of price decouplings on the underlying equity, the SEC exemption restricts onchain trading to 0.25% of large-cap daily average volumes, and 2.5% across all remaining listed equities. Offshore-issued wrapped tokens directed at international participants, including Robinhood’s assets, remain outside regulatory oversight and operate uninterrupted.
The Wrapped Token
Wrapped tokens provide clear utility, particularly across developing regions where acquisition of U.S. equities is restricted or costly. Robinhood’s Stock Tokens span in excess of 190 corporations across 120 nations, while xStocks and Ondo perform equivalent functions through alternative structures. Internationally, this architecture demands zero issuer approval, no entry inside share registries, and no local jurisdictional authorization. This dynamic powers its broad accessibility alongside the counterparty exposure assumed by investors.
The wrapped token broadens market reach by accepting potential pricing deviations from underlying assets, alongside compromises regarding investor entitlements and issuer transparency. The bottleneck stems neither from Robinhood’s operating hours nor any alternative issuer’s schedule. In practice, price discovery persists long after the NYSE or Nasdaq close; numerous brokers, spanning retail and institutional segments, stay active off-hours accepting order flow globally, hedging exposures utilizing overnight markets and derivatives. Nevertheless, acquiring underlying shares in substantial sizes is severely restricted while primary exchanges are dark. Consequently, holders retain a claim lacking external conversion markets outside regular NYSE sessions, which span merely 32.5 out of 168 weekly hours. Beyond operational hours, the premium separating the token from the share’s preceding close constitutes a risk absorbed and paid for by purchasers once valuations reconcile at market open.
The Issuer-Sponsored Token (IST)
The issuer-sponsored framework tokenizes officially registered equities, engaging both the issuer and its designated transfer agent directly in the transaction. Alongside every 24/7 and programmable advantage delivered by wrapped tokens, the IST functions as the actual security, complete with voting privileges and corporate actions.
This fundamentally alters the risk profile demanded of market makers. Quoting a wrapped token at 3 a.m. leaves your inventory backed by a claim on an equity lacking live benchmark pricing. Conversely, quoting an IST means inventory comprises the security itself: the execution represents a direct transaction in the underlying stock. This does not automatically render every quotation meaningful; an illiquid order book at 3 a.m. remains illiquid. However, it eliminates conversion friction between disparate instruments alongside intermediary counterparty exposure.
What the IST fails to secure is broad distribution outside its native regulatory jurisdiction, contrasting with wrapped alternatives. The wrapper’s reach stems from operating as a distinct instrument within a lighter regulatory framework; the IST’s validity derives from functioning as the underlying equity itself. Presently, however, ISTs remain scarce. Only a handful of assets trade, including Bullish’s BLSH, and market liquidity remains thin.
Maturing the Market
The AMC dispute primarily centered on authorization rights for issuing tokenized equities onchain. The more complex challenge involves developing a robust market infrastructure beyond mere issuance. The depth of the wrapper economy remains constrained by restricted conversion protocols between two separate assets operating on mismatched timelines. The IST eliminates this barrier: given appropriate infrastructure, authentic price discovery can transpire continuously on any licensed venue among authorized participant classes rather than select appointed entities.
The issuer-sponsored token serves regulated venues, whereas wrapped alternatives deliver exposure to external participants. Operating both models simultaneously benefits each ecosystem. The wrapper market gains two missing elements at 11 p.m.: live price reference points and an instrument market makers can leverage for arbitrage. Simultaneously, the issuer-sponsored marketplace captures order flow from arbitrageurs utilizing tokens as inventory to facilitate wrapped token liquidity. Backing wrapped tokens directly with IST assets ensures creation and redemption execute on identical rails, settling instantly without relying on cash markets to source underlying equities. That moment marks the transition where both models cease trading as fragmented markets and evolve into unified infrastructure addressing diverse use cases.
Discussions must now pivot toward compressing bid-ask spreads for participants trading at 3 a.m., streamlining conversion processes across different instruments, clearing continuous markets, and determining infrastructural architects. No single enterprise can construct this comprehensive architecture independently. Exchanges, brokerages, fund managers, market makers, transfer agents, and clearinghouses each control isolated components, possessing insufficient capabilities individually. Assembling stakeholders collaboratively to build a cohesive market remains the core objective targeted by industry coalitions like the IST Coalition.
Note: 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.
Originally published at https://www.coindesk.com/opinion/2026/09/24/the-stock-token-debate-and-the-gap-nobody-can-close-alone.
