A group representing the world’s biggest stock exchanges is urging securities regulators to clamp down on so-called tokenised stocks, arguing that the blockchain-based tokens create new risks for investors and risk damaging market integrity.
Tokenised equities are blockchain-based tokens created to represent shares in companies. The tokens represent ownership of the securities but investors do not become shareholders in the underlying company.
Crypto exchange Coinbase and broker Robinhood are among those making a push into the nascent sector that could shake up the securities investing landscape.
Proponents say tokenised equities can cut trading costs, speed up settlement and facilitate around-the-clock trading.
In a letter to the US Securities and Exchange Commission’s Crypto Task Force, the European Securities and Market Authority, and IOSCO’s Fintech Task Force, the World Federation of Exchanges (WFE) said it was concerned the tokens “mimic” equities without providing the same rights or trading safeguards.
“We are alarmed at the plethora of brokers and crypto-trading platforms offering or intending to offer so-called tokenised US stocks,” the WFE, a UK-based industry association for exchanges and clearing houses, said.
“These products are marketed as stock tokens or the equivalent to stocks when they are not.”
