Global Regulators Urge Stricter Oversight of Tokenized Stocks

Exchange industry associations and global regulators are increasingly concerned about the rise of tokenized stocks, with the World Federation of Exchanges (WFE), the European Securities and Markets Authority (ESMA), and the International Organization of Securities Commissions (IOSCO) jointly urging the U.S. Securities and Exchange Commission (SEC) to impose stricter regulatory oversight. These organizations warn that tokenized stocks, which are digital representations of traditional equities issued on blockchains, mimic actual shares but lack the investor protections and regulatory safeguards present in traditional markets [1].

The WFE expressed alarm over the growing number of brokers and crypto-trading platforms offering so-called tokenized U.S. stocks, emphasizing that these products are often marketed as equivalent to real stocks when they are not. The group stressed the importance of clarity and transparency, warning that such mischaracterizations could mislead investors and disrupt the integrity of traditional financial markets [2].

The concerns are amplified by the influence of the signatories. ESMA is one of the EU’s three main financial supervisory authorities, while IOSCO sets global standards for securities regulation and investor protection. The WFE, based in the UK, represents exchanges and clearing houses worldwide, adding weight to its calls for a coordinated response to the challenges posed by tokenized assets [3].

Tokenized assets have grown rapidly, with the total value of the sector exceeding $26 billion. Although tokenized stocks remain a small portion of this market, their potential for expansion is significant, especially as platforms like Coinbase, Kraken, and Robinhood explore the space. The WFE warned that without adequate regulation, tokenized stocks could enable market fragmentation, regulatory arbitrage, and new forms of fraud and manipulation [2].

Regulators are now under increasing pressure to act. While the SEC has shown interest in tokenization—SEC Chair Paul Atkins described it as an “innovation” that should be advanced—Commissioner Hester Peirce has also emphasized that tokenized equities must comply with existing securities laws. The SEC has not yet responded formally to the WFE’s letter, but the growing number of inquiries from global exchanges and regulators suggests the agency is actively considering how to incorporate these developments into its regulatory framework [1].

The debate reflects a broader tension between technological innovation and financial stability. While proponents argue that tokenized stocks can improve efficiency, reduce settlement times, and lower transaction costs, critics highlight the risks associated with insufficient oversight. The WFE and other institutional players have called for clear regulatory definitions, licensing requirements, and enforcement mechanisms to ensure investor protection and market integrity [3].

As the regulatory landscape continues to evolve, the outcome of these discussions will shape the future of tokenized stocks and their role in global capital markets.

Source:

[1] title: Stock Exchange Group Calls for Tokenized ...

url: https://www.pymnts.com/cryptocurrency/2025/stock-exchange-group-wants-tokenized-stocks-crackdown/

[2] title: Global stock exchanges call on regulators to crack down ...

url: https://crypto.news/global-stock-exchanges-call-on-regulators-to-crack-down-on-tokenised-stocks/

[3] title: Stock exchanges urge regulators to crack down on ' ...

url: https://www.msn.com/en-us/money/companies/stock-exchanges-urge-regulators-to-crack-down-on-tokenised-stocks/ar-AA1L9JIO?ocid=finance-verthp-feeds