Crypto News: Global Exchange Groups Warn Against Tokenized Securities Amid Market Surge

Key Insights:

• World Federation of Exchanges sent a letter to the SEC, ESMA, and IOSCO warning about tokenized stock risks as crypto news of bearish narratives took over the markets.
• The tokenized stock market grew 26.6% in 2025 from $284.7 Million to $360.5 Million.
• Major platforms, including Robinhood and Kraken, are expanding tokenized equity offerings globally.

The world’s largest stock exchanges have called on securities regulators to restrict tokenized stocks, arguing these blockchain-based tokens create new investor risks and threaten market integrity.

As Reuters reported on Aug. 25, the World Federation of Exchanges (WFE) sent a letter to the US Securities and Exchange Commission’s Crypto Task Force, the European Securities and Markets Authority, and global securities watchdog IOSCO’s Fintech Task Force last Friday.

The UK-based industry association expressed alarm at the proliferation of tokenized stock offerings from brokers and crypto platforms.

The WFE letter stated concern that tokenized equities “mimic” traditional stocks without providing the same rights or trading safeguards.

These blockchain-based tokens represent ownership of securities but do not grant investors shareholder rights in the underlying company.

Growing Market Faces Traditional Opposition

The tokenized stock market experienced significant expansion in 2025 as per crypto news. The market grew 26.6% from $284.7 Million to $360.5 Million according to analytics platform rwa.xyz.

The tokenized real-world assets (RWA) growth occurred as traditional finance institutions increasingly embraced blockchain-based asset tokenization.

Most of this growth came from xStocks, launched by Backed Finance and Kraken. These tokenized stocks launched publicly at approximately $9 Million market cap and expanded to $55.5 million, representing 516% growth in less than two months.

The xStocks platform surpassed $300 Million in trading volume within four weeks of launch across Bybit, Kraken, and Solana decentralized finance platforms. As of Aug. 25, their cumulative trading volume sits at $3.2 Billion.

Crypto News: Major Players Expand Tokenized Offerings

Crypto exchange Coinbase and broker Robinhood are among those making a push into the nascent sector. This could reshape the securities investing landscape.

Proponents argue that tokenized equities can reduce trading costs, speed up settlement, and enable around-the-clock trading.

In June, Robinhood launched tokenized equities for EU customers. They announced plans to expand into tokens representing shares in privately-held companies.

The company built its tokenized stock platform on the Arbitrum network to enhance Ethereum’s scalability while supporting RWA tokenization.

Kraken began a phased rollout of tokenized US stocks and ETFs powered by Backed’s xStocks innovation for eligible non-U.S. clients.

The platform offers 60 different tokenized assets that can be traded 24 hours a day, five days a week, and withdrawn to self-custodial wallets.

Industry Concerns Mount

The WFE declined to name specific brokers and trading platforms but noted that companies whose stock is being tokenized could suffer reputational damage if the tokens fail.

The association argued that these products are marketed as stock tokens or equivalent to stocks, but they are not.

WFE CEO Nandini Sukumar said the position reflects concerns from market infrastructure players and the broader financial sector, with some share issuers expressing concerns to their exchanges.

The Securities Industry and Financial Markets Association also urged the SEC to reject giving legal exemptions for crypto firms to offer tokenized stocks, saying the products should be subjected to securities laws.

Market maker Citadel Securities sent a letter to the SEC Crypto Task Force urging the agency to treat tokenized equities the same as traditional counterparts.

The letter aligned with WFE’s call for regulators to apply securities rules to tokenized assets, clarify legal frameworks for ownership and custody, and prevent them from being marketed as equivalent to stocks.

However, this is the current SEC’s position on the matter. In a July 9 statement, SEC Crypto Task Force head Hester Peirce noted that tokenized shares are still securities and abide by existing federal legislation.

Global Expansion Continues Despite Bearish Crypto News Narratives

Despite regulatory pushback, tokenization initiatives expanded globally. Japanese financial giant SBI Holdings partnered with Singapore-based Startale to develop an institutional-grade tokenized stock platform, announced on Aug. 22.

The joint venture will focus on 24/7 trading of tokenized US and Japanese stocks with near-instant settlement.

SBI Holdings, which oversees more than 11 trillion yen ($74 Billion) in assets and has over 65 million customers globally, sees asset tokenization as a major shift in global markets.

CEO Yoshitaka Kitao predicted that this movement would eventually lead to the digitalization of capital markets themselves, including exchanges.

The debate reflects a broader tension between traditional financial infrastructure and emerging blockchain-based alternatives.