Global Exchanges Press SEC and ESMA to Police Tokenised Stocks

The World Federation of Exchanges, which represents more than 250 market-infrastructure operators worldwide, has asked leading securities regulators to tighten oversight of so-called tokenised stocks. In a letter sent on 22 Aug. to the U.S. Securities and Exchange Commission, the European Securities and Markets Authority and IOSCO’s Fintech Task Force, the London-based body said the blockchain-based instruments “mimic” equities without granting investors voting, dividend or other shareholder rights and therefore pose new risks to market integrity.

The WFE warned that marketing the tokens as stock equivalents could mislead retail investors and damage the reputation of listed companies if a platform were to fail. It urged regulators to apply existing securities laws to tokenised assets, clarify rules on ownership and custody and restrict promotional claims that suggest the tokens are identical to traditional shares.

Interest in tokenised equities has grown as crypto platforms such as Coinbase and Robinhood seek permission to offer the products, touting lower costs and 24-hour trading. Binance Research has estimated the market could swell to about US$1.3 trillion if 1 % of global equities were moved on-chain; data provider RWA.xyz puts current issuance near US$360 million. The SEC, ESMA and IOSCO have not commented on the WFE’s request, though an SEC commissioner said in July that tokenised securities must comply with existing regulations.

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