The race among crypto companies to sell stock-backed tokens is causing serious concerns in traditional financial circles. According to experts, these new products pose significant risks in terms of investor protection and market stability.
Thanks to Donald Trump’s pro-crypto policies, activity in the sector has accelerated. Robinhood, Gemini, and Kraken have launched tokenized shares in Europe. Coinbase and Dinari have applied for permission for similar products in the US.
In fact, Nasdaq is on track to become the first major exchange to offer tokenized shares.Tokenized shares: Opportunity or danger?
According to industry representatives, these products offer the advantage of 24/7 uninterrupted trading and instant settlement thanks to the blockchain-based transaction ease. However, financial experts warn: Most tokens do not grant equal rights, dividends, or voting rights to real shares.
Reuters’ investigations have revealed that these products are actually similar to derivative products and impose economic risk on investors.
“In fact, investors are not directly buying shares, they are only being exposed through a synthetic product,” says Diego Ballon Ossio of the London-based law firm Clifford Chance.
Regulatory Uncertainty and Investor Risk
While some tokens are actually backed by 1:1 equity, others are only traded through derivative contracts. This leads to significant differences in investor rights.
Dinari CEO Gabriel Otte says that different tokens having different rights is “a major concern”.
Robinhood launched trading with tokens linked to public companies in June and plans to tokenize private company shares as well. However, the introduction of tokens linked to OpenAI drew criticism from the company and became the subject of an investigation by regulators in Europe.
Strong objection from Wall Street
While the SEC (Securities and Exchange Commission) in the US took a crypto-friendly approach during the Trump era, Wall Street giants like Citadel Securities and SIFMA opposed these steps.
“Even if a security is represented on a blockchain, the fundamental investor protections remain unchanged,” says Peter Ryan, head of international capital markets at SIFMA.
It is also stated that MiFID laws in Europe are insufficient to regulate these products.
The European Securities Authority (ESMA) and the World Federation of Exchanges warn that tokenization carries the risk of liquidity fragmentation and insufficient transparency.“If implemented correctly, it increases protection”
Some companies argue that tokenization could strengthen the financial system rather than harm it.
Kraken CEO Mark Greenberg stated that his company offers “gold standard transparency”; Ondo Finance strategy director Ian De Bode says, “When done right, tokenization increases investor protection.”
