This article was generated with the assistance of AI and reviewed by editor Jeffrey Albus before publication.
A coalition of the world’s leading stock exchanges has urged regulators to crack down on tokenized stocks, warning that blockchain-based assets could threaten investor protection and market stability.
In a letter sent on August 22 to the U.S. Securities and Exchange Commission’s Crypto Task Force, the European Securities and Markets Authority, and the International Organization of Securities Commissions’ Fintech Task Force, the World Federation of Exchanges (WFE) said tokenized equities mimic shares without conferring legal ownership or shareholder rights.
Reuters, which reviewed the letter, reported that the WFE described the tokens as imitations of listed equities that could mislead investors and expose issuing companies to reputational fallout if the products collapse. The trade group said some issuers have already voiced concerns about their shares being replicated without consent.
Tokenized equities allow investors to buy digital tokens that track the value of a company’s shares, but unlike traditional stockholders, token buyers do not gain voting rights or protections under securities law.