Global Exchanges Urge Regulators to Crack Down on Tokenized Stocks

A coalition of major global stock exchanges—via the World Federation of Exchanges (WFE)—has called on regulators to clamp down on “tokenized stocks,” warning these blockchain-based instruments could undermine investor protections and destabilize markets.

In a letter dated August 22, the WFE addressed key regulatory bodies, including the U.S. SEC’s Crypto Task Force, ESMA in Europe, and IOSCO’s Fintech Task Force. The group stressed that while tokenized equities mirror the price movements of real stocks, they fail to offer legal ownership, voting rights, or the legal safeguards of traditional shares—posing significant risks to market integrity.

The letter also highlighted concerns that these tokens are often marketed as equivalent to stocks, potentially misleading investors and exposing original issuers to reputational damage if the tokens falter. Prominent platforms like Robinhood and Coinbase are already experimenting with tokenized equity products in Europe and seeking approval in the U.S., raising urgency for clear regulatory guidance.

The WFE urged regulators to extend standard securities regulation to these digital instruments, clarify legal frameworks for ownership and custody, coordinate action globally, and restrict misleading marketing practices.