A group representing the world's biggest stock exchanges has called on securities regulators to clamp down on so-called tokenised stocks, arguing that the blockchain-based tokens create new risks for investors and could harm market integrity, a letter seen by Reuters shows.
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. Proponents say tokenised equities can cut trading costs, speed up settlement and facilitate around-the-clock trading.
The World Federation of Exchanges (WFE), in a letter sent to three regulatory bodies last Friday, said it was concerned the tokens "mimic" equities without providing the same rights or 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 said.
Issuers of stock could suffer reputational damage if the tokens fail, the WFE added. Regulators should apply securities rules to tokenised assets, clarify legal frameworks for ownership and custody; and prevent them being marketed as equivalent to stocks. — Reuters
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