Tokenized stock is a hot topic right now, and it’s starting to make traditional stock exchanges nervous. According to Reuters, the World Federation of Exchanges (WFE) is now asking regulators to step in and tighten the rules.
Tokenized stock is shaking things up by offering digital tokens that mirror company shares.
Why these Exchanges are Concerned
On August 25, Reuters reported that the WFE sent a letter to major regulators. These included the U.S. SEC, the European ESMA, and IOSCO’s Fintech Task Force. These blockchain-based tokens may look like regular stocks, but they are not.
According to Reuters, the World Federation of Exchanges (WFE) has urged regulators including the U.S. SEC, ESMA, and IOSCO to tighten oversight of tokenised stocks, warning that these products mimic equities without offering shareholder rights or market safeguards, potentially…
— Wu Blockchain (@WuBlockchain) August 25, 2025
The WFE warned that many crypto platforms, such as Coinbase and Robinhood, are already moving into tokenized stock offerings. Robinhood even launched tokenized equities for EU customers in June. It plans to offer tokens representing shares of private companies like OpenAI. Coinbase is also seeking approval from the SEC to offer similar products.
Tokenized stock
A tokenized stock allows investors to trade stock-like products faster and at lower costs. Supporters say it can make trading cheaper, settlements quicker, and even allow 24/7 access.
Tokenized stocks are the new crypto craze.
Coinbase. Robinhood. Kraken.
See article: https://t.co/m7zPHaLthV
Everyone’s rushing to bring equities on-chain. But here’s the twist… 👇 pic.twitter.com/jZDh14pzlV
— Redbelly Network (@RedbellyNetwork) August 22, 2025
However, the WFE says there’s a big problem. These tokens don’t actually make you a shareholder. They mimic equities but don’t provide voting rights or the same legal protections. Even worse, if something goes wrong, the copied companies’ reputations could suffer.
🚨 NEW: The World Federation of Exchanges has urged regulators to crack down on tokenized stocks, warning they mimic equities without offering the same rights or safeguards.
— Cointelegraph (@Cointelegraph) August 25, 2025
What Happens Next?
The WFE wants regulators to act fast. They are asking for clear rules that apply securities laws to tokenized assets and clarify ownership and custody rights. The organization also wants platforms to stop marketing these assets as being equal to real stocks.
Some regulators agree. An SEC commissioner recently said tokenized securities still need to meet existing securities rules. Meanwhile, neither Coinbase nor Robinhood has said anything about the WFE’s letter. OpenAI, however, clarified that it has no involvement in any tokens using its name.
🚨 LATEST: OpenAI clarifies that “OpenAI tokens” are not legitimate equity, stating they did not partner with Robinhood and were not involved in any token creation. pic.twitter.com/7FtjcQx9aV
— Cointelegraph (@Cointelegraph) July 3, 2025
The tokenized stock is opening up new possibilities and posing challenging questions at the same time. The WFE’s request for tighter regulations suggests that traditional markets are seeking clarification before this movement becomes too significant. As more platforms join the tokenized stock market, the balance between innovation and regulation is still unclear.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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