A coalition of leading global stock exchanges is urging regulators to take action against tokenized stocks, expressing concerns that these blockchain-based assets could jeopardize investor protection and market stability. In a letter dated August 22, the World Federation of Exchanges (WFE) highlighted that tokenized equities imitate shares without granting legal ownership or shareholder rights, potentially misleading investors. The WFE also noted that some companies are troubled by concerns over their shares being replicated without consent. Tokenized equities allow investors to purchase digital tokens that track the value of a company's shares, but unlike traditional shareholders, token buyers lack voting rights and securities law protections. While proponents claim these instruments can lower trading costs and enable 24/7 markets, regulators have emphasized that existing securities laws still apply. Companies like Robinhood and Coinbase have started to explore these offerings, with Robinhood launching tokenized equities for European customers and Coinbase seeking regulatory approval in the U.S.

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