The World Federation of Exchanges (WFE), an association of the largest stock exchanges in the world, sent a letter to key regulators – the U.S. Securities and Exchange Commission (SEC), the European Securities and Markets Authority (ESMA), and the International Organization of Securities Commissions (IOSCO). In the document, the WFE calls for stricter regulation of tokenized shares, which they believe pose new risks to investors and undermine market integrity.
Tokenized shares are blockchain tokens representing ownership in traditional company shares, but without full shareholder rights, such as voting rights or dividends. The WFE is concerned that brokers and crypto platforms, such as Coinbase, Robinhood, and Kraken, are promoting these products as equivalent to real shares, misleading retail investors. "We are concerned about a multitude of brokers and crypto platforms offering so-called tokenized U.S. shares. These products are marketed as share tokens or equivalent to shares when they are not," the letter states. The federation warns of reputational risks for share issuers in the event of token failures, as well as market fragmentation and potential fraud opportunities.
The market for tokenized assets grew by 26.6% in 2025, reaching $360.5 million, with projections up to $1.3 trillion at a 1% tokenization of global shares. Platforms praise tokenization for reducing costs, accelerating settlements, and enabling 24/7 trading, but the WFE insists on applying securities rules, clear ownership norms, and prohibitions on misleading advertising.
SEC Commissioner Hester Peirce confirmed in July 2025 that tokenized securities fall under existing legislation, but the sector is still seeking clarity. The SIFMA association also urged the SEC to deny exemptions for crypto companies. This pressure reflects a broader conflict between blockchain innovation and investor protection. Despite resistance, tokenization is gaining momentum: SBI Holdings from Japan is partnering with Startale for 24/7 trading of tokenized shares in the U.S. and Japan.
These reforms could shape the future of global markets by balancing innovation with safety.
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