Key Takeaways
Stock exchanges have warned that tokenized stocks are ‘copycats’ with no rights and protections as traditional shareholders. Will crypto lobby fight back?
Stock exchanges have urged regulators to crack down on ‘tokenized stocks’, calling them ‘mimics’ and ‘copycats’ that operate in grey areas.
Under their global association, World Federation of Exchanges (WFE), the group said that the ‘mimics’ are not stocks and would undermine market integrity if not reined in.
“The emergence of unregulated platforms offering so-called tokenised equities raises serious concerns. These offerings often bypass established safeguards, creating risks for investors, undermining market integrity, and enabling regulatory arbitrage.”
On-chain stocks or ‘tokenized stocks’ have recently gained market interest after Robinhood debuted them for its European users to have access to the U.S equity market.
Additionally, Backed Finance unveiled a similar offering (xStocks) in collaboration with Kraken and other Solana[SOL]-based platforms, including Jupiter.
Coinbase has also sought to list similar products.
Will regulators heed WFE recommendations?
According to WFE, ‘tokenized stocks’ are derivatives with no retail protections whatsoever for buyers.
In a letter to regulators, stock exchanges warned that the trend would lead to ‘fragmented liquidity’ and drive users away from exchanges.
“Tokenised equities traded outside established and regulated venues may divert order flow from exchanges and ot
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Author: Benjamin Njiri
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