The European Securities and Markets Authority (ESMA) warned on Monday that blockchain-based “tokenized stocks” risk causing investor misunderstanding because they generally do not confer shareholder rights despite tracking a company’s share price.
EU Regulator Warns Tokenized Stocks May Cause Investor Misunderstanding
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ESMA executive director Natasha Cazenave told a Dubrovnik conference that several fintech firms offer products that give exposure to listed equities or derivatives backed by stock held via special-purpose vehicles, providing benefits like fractionalization and 24/7 access but potentially obscuring legal ownership. She urged clear communication and safeguards, noting tokenization could deliver efficiency gains but remains “small and largely illiquid.” ESMA’s concerns mirror calls from the World Federation of Exchanges for tighter oversight, as platforms including Robinhood and Coinbase expand into tokenized-stock offerings in the European Union.
