August 28, 2025
By Anjali Kochhar
Imagine buying a share of Apple or Tesla online only to discover later that what you hold is not an actual stock, but a token that carries none of the rights or protections of real ownership. That is exactly the concern shaking global markets right now, and the world’s top stock exchanges are demanding urgent action.
The World Federation of Exchanges (WFE), the trade group representing leading stock and clearing exchanges worldwide, has sounded the alarm over the rise of tokenized stocks. In a letter sent to major regulators, including the U.S. Securities and Exchange Commission, the European Securities and Markets Authority, and the International Organisation of Securities Commissions, the WFE warned that these tokens are being sold to investors as if they were traditional shares when in fact they lack the core features of genuine equity ownership.
Tokenized equities have become popular because of their appeal: fast settlement, round-the-clock trading, and lower costs. Platforms like Robinhood, which has begun offering tokenized equities in Europe, and Coinbase, which is seeking approval to expand in the United States, are fueling this surge. Yet the fine print reveals a very different reality. Holders of these tokens have no voting rights, no legal claim to dividends, and no direct ownership in the companies they believe they are investing in.
WFE Chief Executive Officer Nandini Sukumar has warned that this marketing is deeply misleading and could harm both investor trust and the reputation of the companies whose names are being used. Issuers themselves are also worried that if token versions of their stock collapse or misrepresent their brand, the fallout could damage confidence in the wider market.
The WFE has urged regulators to take immediate steps. These include applying existing securities laws to tokenized products, creating robust legal frameworks for ownership and custody, and cracking down on advertising that equates tokens with real shares.
Experts add that while the idea of tokenized assets is innovative, it comes with structural fragility and legal ambiguity. Without enforceable rights or transparency, token holders are left vulnerable if a platform goes under or trading freezes.
As tokenized versions of stocks, bonds, and other assets continue to grow, the battle between innovation and investor protection is heating up. For now, the world’s stock exchanges are united in one message: regulators must step in before the promise of tokenized markets turns into a dangerous illusion.
About the author
Anjali Kochhar covers cryptocurrency and blockchain stories in India as well as globally. Having been in the field of media and journalism for over four years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
