The rise of synthetic tokenized stocks threatens to erode the very foundation of trust that makes U.S. capital markets the global gold standard, according to Aaron Kaplan, founder of Promethum, who argues the model shortchanges American investors and bypasses the protections built into traditional securities ownership.
The Problem With Synthetic Models
At the heart of Kaplan's critique is a distinction between genuine ownership and derivative exposure. Synthetic tokenized stocks do not represent direct ownership of the underlying equity. Instead, they offer investors a token that merely tracks a stock's price, often issued by a third party that holds the actual shares — or in some cases, a position designed to mimic the share's performance.
That structure, the argument goes, breaks the clean chain of ownership that American investors have long taken for granted. In U.S. markets, whoever holds a share possesses the full bundle of rights that come with it, including voting power, dividends, and legal recourse. Synthetic products can strip away or obscure those entitlements, leaving buyers with little more than price exposure.
When you own a share in America, you own all of it — synthetic tokens quietly sell you something far less.
Trust and the Issuer-Led Model
The deeper concern is what synthetic tokens do to confidence in the system itself. The reliability of U.S. equity markets rests on a well-understood framework in which issuers, regulators, and investors all operate within clear rules. Synthetic instruments, by contrast, insert intermediaries and counterparty risk that can be difficult for ordinary investors to evaluate.
Kaplan contends that this approach cheapens the trust that has made American markets the envy of the world. By replicating the appearance of stock ownership without the substance, synthetic tokens risk introducing ambiguity precisely where clarity has been a competitive advantage.
The alternative favored in the piece is an issuer-led tokenization model, in which the companies behind the securities participate directly in bringing tokenized versions to market. That structure preserves the integrity of ownership and keeps the established protections of U.S. capital markets intact.
Key distinctions raised in the argument include:
- Synthetic tokens track price rather than conveying true ownership
- Investors may lose voting rights, dividends, and legal protections
- Counterparty and intermediary risks are added to the equation
- Issuer-led tokenization preserves the traditional ownership chain
The broader message is a