Global Exchanges Urge Stricter Regulation of Tokenized Stocks Amid 26.6% Market Surge in 2025

Global stock exchange organizations have raised concerns over the rapid expansion of tokenized equities, urging regulators to enforce existing securities laws to mitigate risks to investor protection and market integrity. The World Federation of Exchanges (WFE) issued a letter to the U.S. Securities and Exchange Commission (SEC), European Securities and Markets Authority (ESMA), and International Organization of Securities Commissions (IOSCO), highlighting the potential dangers of blockchain-based tokenized stocks. These digital assets replicate the price behavior of traditional equities but do not confer ownership rights, voting powers, or the same legal safeguards [1].

The WFE expressed alarm over the increasing number of brokers and crypto platforms offering tokenized versions of listed stocks. While the letter did not name specific companies, major platforms such as Robinhood and Kraken are already active in the space. Robinhood has rolled out tokenized equities in Europe and is planning to extend the offering to include shares in privately held companies. Kraken, through its partnership with Backed Finance, has launched xStocks, a product that has seen significant growth in a short time. xStocks started with a market cap of approximately $9 million and surged to $55.5 million in under two months, with cumulative trading volume reaching $3.2 billion across platforms like Bybit and Solana-based decentralized finance services [2].

The tokenized stock market expanded by 26.6% in 2025, growing from $284.7 million to $360.5 million, according to analytics firm rwa.xyz. This growth reflects a broader trend of traditional financial institutions embracing blockchain-based asset tokenization. Proponents argue that tokenized equities can reduce trading costs, accelerate settlement times, and offer 24/7 trading, appealing to a new generation of retail investors [3].

However, critics and regulators remain cautious. The WFE warned that these tokens are often marketed as equivalents to traditional stocks, potentially misleading investors and causing reputational harm to companies whose assets are tokenized. Citadel Securities, a major market maker, echoed these concerns in a letter to the SEC, urging the agency to treat tokenized equities the same as their traditional counterparts [4].

Regulatory clarity is now critical as the sector gains momentum. The SEC has maintained that tokenized shares remain subject to existing federal securities laws, with Commissioner Hester Peirce reiterating that digitization does not negate legal obligations. Meanwhile, the Securities Industry and Financial Markets Association (SIFMA) has called for legal exemptions for crypto firms offering tokenized stocks to be rejected, emphasizing the need for these products to comply with securities laws [5].

Despite regulatory resistance, the tokenization movement continues to expand globally. In August, SBI Holdings, a Japanese financial giant, partnered with Singapore-based Startale to develop an institutional-grade tokenized stock platform. The collaboration aims to offer 24/7 trading of tokenized U.S. and Japanese equities with near-instant settlement. SBI Holdings, which manages over 11 trillion yen in assets, views asset tokenization as a fundamental shift in the global capital markets [6].

The growing adoption of tokenized equities underscores a broader debate between traditional financial infrastructure and blockchain-based alternatives. While the potential benefits are clear, the WFE and global regulators insist that without adequate oversight, these products could compromise investor confidence and market stability. As the sector continues to evolve, the challenge for regulators will be to balance innovation with investor protection.

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[1] [Stock exchanges call for stricter regulation of 'tokenized stocks'](https://www.proactiveinvestors.com/companies/news/1077264/stock-exchanges-call-for-stricter-regulation-of-tokenized-stocks-1077264.html)

[2] [Global Regulators Urge SEC to Establish Clear Oversight for Tokenized Stocks](https://www.ainvest.com/news/global-regulators-urge-sec-establish-clear-tokenized-stock-oversight-2508/)

[3] [Tokenized equities could reach $1.3 trillion but regulators see a ticking bomb](https://cryptoslate.com/tokenized-equities-could-reach-1-3-trillion-but-regulators-see-a-ticking-bomb/)

[5] [Global stock exchanges call for crackdown on tokenized stocks](https://blockworks.co/)

[6] [Crypto News: Global Exchange Groups Warn Against Tokenized Securities Amid Market Surge](https://coinmarketcap.com/community/articles/68acd5ad9de84b22569c129b/)