Synthetic tokenized stocks are bad for American investors

Aaron Kaplan, founder of Promethum, warns that synthetic tokenized stocks—offshore-issued debt instruments that mirror the price of U.S. shares but do not convey ownership of those shares—undermine trust in American markets and siphon value away from U.S. investors. He cites a public dispute between AMC’s CEO Adam Aron, who accused Robinhood of tokenizing AMC shares without consent, and Robinhood CEO Vlad Tenev, who defended the practice as meeting international demand for U.S. equity exposure. Kaplan lays out how wrappers work: an issuer purchases U.S. shares as collateral and then issues tradable tokens offshore that change hands without touching U.S. exchanges or the companies’ official share registers. He argues this structure captures trading volumes, liquidity and fees that would otherwise benefit U.S. markets, and therefore can distort measured demand and the effective capitalization of tokenized companies. Kaplan references a Citi projection that the synthetic token market could reach $2.7 trillion by 2030 and notes nearly 200 U.S. companies have already been tokenized in this fashion. As a regulatory counterpoint, Kaplan points to the SEC’s Sept. 17 innovation exemption, which he says excludes synthetic tokens and requires qualifying tokenized securities to deliver the same rights and privileges as traditional shares, including dividends and voting. The exemption also includes a mechanism to notify companies and give them the right to object before a third party tokenizes their stock, addressing concerns raised by AMC’s CEO. Kaplan advocates an alternative: tokenization that creates a digital twin of a custodial security held within existing U.S. infrastructure. He highlights a DTCC tokenization service planned for launch this year that would keep tokenized assets within the national clearing and settlement system, so a foreign buyer acquiring a token on a licensed venue would be buying the underlying share. In Kaplan’s view, this model preserves shareholder rights, deepens U.S. market liquidity, and channels new global capital directly to American companies.