Global Exchanges Call for Stronger Oversight on Tokenised Stocks Amid Rising Institutional Interest

The emergence of tokenised equities—blockchain-based tokens representing ownership stakes in traditional securities—has sparked growing debate among global market participants about investor protection, legal clarity, and market integrity. While the concept promises operational efficiencies such as lower trading costs, faster settlement, and continuous trading capabilities, leading exchanges warn that the current framework poses significant risks if left unregulated.

The World Federation of Exchanges (WFE), representing some of the world’s largest stock exchanges and clearinghouses, has urged regulators to establish clear rules for tokenised stocks. According to the WFE, these instruments “mimic” traditional equities without granting shareholders the full legal rights, voting power, or protection mechanisms inherent to conventional securities. In a letter to regulators including the U.S. Securities and Exchange Commission (SEC), the European Securities and Markets Authority (ESMA), and IOSCO’s Fintech Task Force, the WFE stressed the importance of preventing tokenised equities from being marketed as equivalent to standard shares.

The concerns are both operational and reputational. Issuers of the underlying stocks may face unintended consequences if tokenised versions fail or are mismanaged, potentially harming corporate reputations and investor confidence. The WFE highlighted that some issuers have already raised concerns to their exchanges about the proliferation of these products.

Major players in the crypto ecosystem, including Coinbase and Robinhood, are actively expanding into tokenised equities, particularly targeting European and U.S. markets. Robinhood launched tokenised equities for EU customers in mid-2025, while Coinbase has sought SEC approval to offer similar products to its U.S. clientele. Proponents of tokenised shares emphasize their efficiency, noting that blockchain settlement could reduce operational frictions and enable around-the-clock trading across jurisdictions.

However, the lack of a standardized regulatory and custodial framework presents hurdles for institutional investors and market infrastructure providers. The WFE advocates that tokenised assets should be subject to the same securities regulations as conventional stocks, including disclosure obligations, custody standards, and investor protections. Clear guidance on ownership rights, record-keeping, and risk management is essential to integrate tokenised products safely into mainstream financial markets.

Market analysts note that while tokenised equities could complement traditional trading infrastructure and create new liquidity channels, the pace of adoption must be tempered by robust regulatory oversight. Without such frameworks, there is a risk of investor confusion, operational disruption, and potential legal exposure for both issuers and trading platforms.

Industry participants emphasize that tokenisation is part of a broader trend toward digital financial infrastructure, including decentralized finance and programmable securities. Yet, the WFE’s cautionary stance signals that exchanges and regulators are seeking a balance between innovation and investor protection, aiming to prevent market fragmentation and maintain trust in established capital markets.

As tokenised equities gain traction, the dialogue between crypto platforms, traditional exchanges, and regulators is likely to intensify, shaping the future of cross-border securities trading and digital asset integration within the existing financial ecosystem.