Stock Exchange Group Urges Regulators to Tighten Oversight on Tokenized Stocks

The World Federation of Exchanges (WFE) has called on global regulators, including the U.S. SEC and the European ESMA, to intensify scrutiny of tokenized equities. In a letter to securities watchdogs, the WFE warned that these blockchain-based products mimic traditional stocks without granting shareholder rights or market safeguards.

Tokenized equities represent ownership through digital tokens but do not confer actual equity stakes. The WFE expressed alarm over the proliferation of brokers and crypto platforms offering such products, emphasizing they are not equivalent to traditional stock tokens as marketed.

The group urged regulators to apply existing securities rules to tokenized assets, clarify legal frameworks for ownership and custody, and prevent misleading marketing. Failure to do so, the WFE cautioned, could lead to reputational damage for issuers if the tokens underperform.