EU Watchdog Warns Tokenized Stocks Could Mislead Investors
The European Securities and Markets Authority (ESMA) has flagged potential risks tied to tokenized stocks, emphasizing investor confusion over the lack of traditional shareholder rights. These blockchain-based assets, while offering 24/7 trading and fractional ownership, often exclude voting or dividend entitlements.
Natasha Cazenave, ESMA's executive director, underscored the need for clearer disclosures and safeguards. The World Federation of Exchanges has joined the call for tighter regulatory oversight to protect market integrity.
Despite crypto industry enthusiasm for tokenization's disruptive potential, ESMA notes most projects remain niche and illiquid. The debate highlights the growing pains of merging traditional finance with blockchain innovation.
