Strong Warning from Stock Exchanges Regarding Tokenized Shares

The World Federation of Exchanges (WFE), representing the world’s largest exchanges, has called on regulators to oversee “tokenized shares.” According to the federation, these products create new risks for investors and threaten market integrity.

Tokenized shares are offered as blockchain-based tokens representing company shares. However, when investors buy these tokens, they don’t have real shareholder rights.

In a letter sent to the US Securities and Exchange Commission (SEC), the European Securities and Markets Authority (ESMA), and the global regulator IOSCO, the WFE stated that marketing these products “as if they were shares” is misleading.

The Federation emphasized that the entry of platforms such as Coinbase and Robinhood into this space is causing concern in the sector.

It was warned that companies issuing physical shares could suffer reputational damage if the tokens fail.

WFE requested that regulators include tokenized assets under securities rules, clarify the ownership and custody framework, and prevent them from being marketed as share equivalents.