Global regulators, exchanges push back on tokenized stocks in SEC letter

ESMA, IOSCO and the World Federation of Exchanges urge the SEC to tighten oversight of tokenized equities, warning of investor risks as Wall Street giants eye the growing market.

Exchange industry associations and global regulators are joining forces to curb the growth and adoption of tokenized stocks, arguing that these products do not represent actual equities and expose investors to significant risks.

According to Reuters, the European Securities and Markets Authority (ESMA), the International Organization of Securities Commissions (IOSCO), and the World Federation of Exchanges (WFE) have sent a letter to the US Securities and Exchange Commission’s (SEC) Crypto Task Force, urging stricter regulatory oversight of tokenized stocks.

The organizations argue that tokenized stocks “mimic” the equities they are designed to represent but lack the investor protections built into traditional markets.

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