Ethereum News Today: WFE Warns Tokenized Stocks Mislead Investors Over Equity Features

Tokenized stocks may present a deceptive illusion to investors, according to a recent warning from the World Federation of Exchanges (WFE), a global financial watchdog. These digital tokens, which represent real-world assets on blockchain platforms, often lack the core features of traditional equities—such as voting rights and dividend distributions—yet are frequently marketed as if they do. The WFE emphasized that this misalignment could mislead retail investors into believing they hold genuine equity stakes, potentially leading to significant financial and reputational risks when these instruments fail [1].

The WFE has taken a proactive stance by sending letters to major regulatory bodies, including the U.S. Securities and Exchange Commission (SEC), the European Securities and Markets Authority (ESMA), and the International Organization of Securities Commissions (IOSCO). In these communications, the group called for updated securities laws to govern tokenized assets. Key recommendations include clearer rules on custody, disclosure, and promotion, with a specific call to prevent such products from being labeled as “stock equivalents.” The WFE also warned that if these instruments fail, the fallout could extend to listed companies, damaging investor confidence in the broader financial system [1].

Although the tokenized stock market is still in its early stages, it is experiencing rapid growth. According to RWA.xyz, the total value of tokenized equities is estimated at around $360 million, with platforms such as Robinhood, Kraken, and Gemini experimenting with blockchain-based stock exposure. Binance Research has forecast that the market could surpass $1.3 trillion if just 1% of global equities are tokenized. However, the immediate debate centers not on the market’s potential but on the regulatory and structural safeguards necessary to protect investors [1].

The broader trend of real-world asset (RWA) tokenization is also gaining momentum. Animoca Brands recently noted a 70% increase in the tokenized RWA market since January 2025, with the sector currently valued at $26.5 billion. A significant portion of this value comes from private credit and U.S. Treasury-backed tokens, which together account for nearly 90% of the market. The firm described the current phase as an “early-stage land grab,” with asset managers vying to control infrastructure for tokenized assets [2].

Ethereum currently dominates the RWA tokenization landscape, hosting 55% of the total value—approximately $14.5 billion—excluding stablecoins. This share increases to 76% when layer-2 solutions like Arbitrum and Polygon are included. However, the report anticipates a shift toward a multichain ecosystem, where high-throughput blockchains and interoperable platforms gain more traction [2].

The rising interest in RWAs has had a positive impact on key tokens in the space. Ethereum’s native token, ETH, recently reached an all-time high above $4,399, while Chainlink’s LINK token has seen strong performance due to its role in linking traditional financial data with blockchain systems. Animoca Brands has also launched a new RWA marketplace, NUVA, to further support its strategy in digital property and tokenized finance [2].

Despite these developments, the industry is under growing regulatory scrutiny. A major stock exchange group has called for a crackdown on tokenized stocks, citing concerns over fund reconciliation and investor protection [3]. These calls for oversight highlight the urgent need for clear, enforceable frameworks to ensure transparency and accountability in the tokenized asset space.

While the convergence of traditional finance and blockchain continues to accelerate, the WFE’s warning underscores the importance of balancing innovation with investor protection. As the market evolves, it remains to be seen whether regulatory clarity and structural safeguards can emerge in time to prevent potential missteps [1].

Sources:

[1] Coindoo. Tokenized Stocks Could Mislead Millions, Global Watchdog Warns. https://coindoo.com/tokenized-stocks-could-mislead-millions-global-watchdog-warns/

[2] Coindoo. Tokenization Boom: Animoca Sees RWAs Becoming the Future of Finance. https://coindoo.com/tokenization-boom-animoca-sees-rwas-becoming-the-future-of-finance/

[3] PYMNTS.com. TechREG: Stock Exchange Group Calls for Tokenized Stocks Crackdown. https://www.pymnts.com/topic/techreg/