Catenaa, Sunday, August 31, 2025- The World Federation of Exchanges (WFE) has called on global regulators, including the SEC and European ESMA, to tighten supervision of tokenized stocks, citing risks to investors and market integrity.
In a letter sent last Friday, the WFE warned that blockchain-based stocks “mimic” traditional equities without granting shareholder rights or standard trading protections.
Tokenized equities allow investors to hold digital tokens representing company shares, but holders do not receive legal ownership or voting rights.
The WFE urged regulators to apply existing securities rules, clarify custody and ownership frameworks, and prevent tokenized products from being marketed as equivalent to actual stocks.
The coalition highlighted potential reputational risks for issuers if these tokens fail.
Major platforms have already entered the space, including Robinhood, which launched tokenized U.S. stocks and ETFs, alongside centralized exchanges such as Kraken and Coinbase exploring tokenized offerings.
Despite rapid growth, regulators maintain that tokenized securities remain subject to traditional securities law, as SEC commissioner Hester Peirce emphasized in July, noting blockchain does not alter the legal nature of the underlying assets.
The market for tokenized equities has surged nearly 300% since early 2024, according to CoinGecko, reflecting strong institutional interest in real-world assets.
Experts warn, however, that tokenization alone adds limited value beyond digital representation and underscores the importance of clear regulatory guidance for investor protection in the expanding digital asset ecosystem.
