The World Federation of Exchanges (WFE) has called on financial supervisors to tighten the supervision of tokenized shares, warning that the products can expose investors to hidden risks and undermine the confidence in traditional markets.
Reuters Reported on 25 August that WFE warned that Tokenized shares replicate the appearance of shares without granting the same rights or protection that shareholders usually receive.
In contrast to conventional shares, tokenized versions enable investors to get synthetic exposure to the performance of a company without keeping legal ownership.
The WFE said that this marketing approach risks the confusing private investors, who can assume that they vote or have dividend rights when they don’t. If these products fail, the group warned, the reputation -Fall -out of it can extend to listed companies, damaging broader market integrity.
The WFE urged supervisors to expand the securities laws to cover Tokenized assets to prevent such results. It ordered to clarify the rules on ownership and detention and at the same time limit the promotion of these instruments as ‘stocksquivalents’.
The Industrie Organ sketched its concern about the fast-growing sector in a letter to the US Securities and Exchange Commission, the European Securities and Markets Authority (ESMA) and the International Organization of Securities Commissions (iOSCO).
Tokenized stock rises
The intervention of the WFE comes when tokenized shares gain strength on both crypto-native and regular platforms.
In recent months, prominent crypto-trading platforms such as Robinhood, Kraken and Gemini tokenized versions of shares traded by the US have rolled out and offering new ways to get exposure outside of traditional brokerage channels.
This rapid increase in adoption has attracted considerable bullish predictions, with Binance research estimating that the sector could reach a market capitalization of $ 1.3 trillion if only 1% of the worldwide shares would go to block chains.
Despite this bullish forecast, Tokenized shares remain a fraction of that potential. Data from RWA.XYZ show the sector with around $ 360 million in market capitalization, making it one of the smaller segments of Real-World assets-tokenization.
Nevertheless, the proponents point out the rising demand of retail and institutional investors as proof that the market could quickly scale as soon as regulatory clarity arrives.