SEC narrows exemption for tokenized equities; Robinhood's stock-token model falls short

Galaxy Research says the SEC's latest exemptive relief for tokenized securities does allow some forms of third-party tokenized stocks, but under far tighter conditions than the market typically implies. In comments published Sept. 20 and cited by Jinse Cai, Galaxy Research Director Alex Thorn said eligible tokens must correspond to real NMS-listed stocks and confer full legal, economic, and governance rights on holders. Structures that only replicate price exposure—including notes, swaps, SPV interests, or other packaged securities—are excluded from the SEC's definition. Thorn added that several existing third-party tokenized stock offerings, including products associated with Robinhood, Ondo, and xStocks, do not align with the SEC's framework. He highlighted Robinhood Stock Tokens in particular, which Robinhood describes as "tokenized debt securities" that provide economic exposure only. Token holders have no legal or beneficial ownership in the underlying companies, leaving the product outside the SEC's exemption criteria.