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The SEC released a comprehensive rating framework for tokenized securities on the same day that Robinhood’s CEO publicly called for the tokenization of the stock exchange.
Meanwhile, the Terra mirror protocol – the first large-scale experiment in tokenized synthetic securities – ended with losses of more than $ 40 billion from investors and an admission of guilt from its founder, which highlights the urgent need for regulatory clarity.
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The Securities and Exchange Commission provides a framework for tokenized securities
On January 28, the SEC’s Divisions of Corporate Finance and Investment Management, Trading and Markets jointly issued a “Statement on tokenized securitiesThe statement systematically categorizes different structures for blockchain-registered securities and outlines how existing federal securities laws apply to each type.
The SEC has divided tokenized securities into two main categories. The first is “issuer-sponsored tokenized securities”, where companies issue their securities directly in tokenized form. In this case, the blockchain acts as part of the security holder’s master file. Transfers of tokens constitute transfers of ownership of securities.
The second is “third-party sponsored tokenized securities,” where parties unrelated to the issuer tokenize outstanding securities. The Securities and Exchange Commission has divided this model into custody and synthetic models. Custody models contain the underlying securities in custody, with tokens representing indirect ownership interests. Synthetic models only provide price exposure without granting real property rights.
Mirror Protocol: Dark precedent
The first large-scale experiment in what the SEC now defines as “synthetic tokenized securities” was the mirror protocol. Docoin launched the game in December 2020. The platform, built on the Tera blockchain, is said to have allowed trading in synthetic copies of shares listed in the United States such as Apple and Tesla.
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Du Quan promoted the project as “giving intuitive access to global financial markets to marginalized users.” He stated that Mirror operates in a decentralized manner. He added that neither he nor Terraform played a role in his decision.
The reality was completely different. Second To make a decision The US Attorney’s Office in December 2025, “Du Quan and Terraform secretly maintained control of Mirror and used automated trading bots to manipulate synthetic asset prices.” It also “caused Terraform to inflate key user indicators to mislead investors about the extent of dependence and decentralization of Mirror.”
Mirror was part of a wider fraud scheme at Terraform. When UST and LUNA collapsed in May 2022, investors lost more than $40 billion. Du Quan was arrested in Montenegro in March 2023 while traveling with a fake passport. He was sentenced to 15 years in prison December 11, 2025.
Robinhood Stock Codes: A Different Approach
Robinhood really delivers More than 2000 American stock symbols in Europe. The company describes them as “tokenized contracts that track the (stock) price” and “derivative contracts that do not grant rights to the underlying securities” – which fits into the SEC’s category of synthetic tokenized securities, such as Mirror.
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But the differences are huge. Robinhood operates as a regulated financial institution, adheres to MiFID II standards and transparently discloses the derivative nature of its products. The company claims that the underlying assets are held by an institution licensed in the United States. Investors can start with as little as €1 and receive dividends when they qualify.
As for Mirror, it disguised itself as a “decentralized community project” to evade regulation, while Du Quan secretly controlled it. Its collateral was the UST stablecoin algorithm, which eventually collapsed.
Tenev’s vision: From GameStop to tokenization
Robinhood CEO Vlad Tenev released a statement… piano January 28 – exactly five years after the cessation of trading of GameStop plunged his company into crisis. He identified the T+2 settlement system as the root cause, arguing that instant settlement supported by tokenization is the solution.
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“T+1 is still very long, especially when you consider that it actually means T+3 on Friday, or T+4 on long weekends,” Tenev wrote. Blockchain-based tokenization will eliminate liquidation risks and allow customers to trade freely at any time.
Tenev has announced plans to enable round-the-clock trading and access to DeFi in the coming months. Investors can hold share tokens themselves and use them to lend and bet on shares. If this is achieved, it will change the structure of Robin Hood from industrial to incubator. This can address the actual risk: loss of total capital if the company declares bankruptcy.
Pushing towards organizational clarity
Tenev praised the current SEC leadership for supporting tokenization experiments, and urged the passage of the CLARITY Act, which It is currently being considered in Congress. “The legislation will ensure that successive committees cannot abandon or reverse the progress made by this financial body,” he wrote.
The SEC’s statement represents employee opinions without binding legal force, but the Mirror Protocol’s precedent shows what regulatory loopholes can create. Du Quan built his fraudulent empire by claiming that “decentralization” exempted him from securities laws – a claim that the New Framework Securities Commission categorically rejects.
