Tokenized versions of equities are drawing sharp scrutiny from the World Federation of Exchanges (WFE), which says the fast-growing products risk blurring the line between real company shares and synthetic imitations.
Unlike traditional stock ownership, these digital tokens don’t provide shareholder rights such as voting power or dividends. Yet, the WFE argues they are often marketed as though they do. That mismatch, the group warned, could mislead retail buyers into believing they hold genuine equity stakes.
If such instruments collapse, the reputational damage could spill onto listed companies themselves — undermining confidence in the broader financial system.
Push for Regulatory Action
In letters sent to regulators including the SEC, ESMA, and IOSCO, the WFE called for securities laws to be updated to cover tokenized assets. The body suggested clearer rules on custody, disclosure, and promotion, and urged that these products not be advertised as “stock equivalents.”
Market Still Small, But Growing
Tokenized equities remain a niche sector, with RWA.xyz estimating about $360 million in value. Still, adoption is accelerating as platforms like Robinhood, Kraken, and Gemini experiment with blockchain-based stock exposure.
Bullish forecasts remain: Binance Research has speculated the market could eventually top $1.3 trillion if just 1% of global equities moved onto blockchains. For now, though, the debate is less about scale and more about safeguards — and whether investor trust can survive without them.
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Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/tokenized-stocks-could-mislead-millions-global-watchdog-warns/