Global Stock Exchange Group Urges Targeted Rules as Tokenized Equities Surge in Popularity
The debate over tokenized stocks in the United States is escalating, with major stock exchanges urging regulators to avoid granting broad exemptions to crypto platforms. In a recent letter, the World Federation of Exchanges (WFE) warned that widespread regulatory relief could weaken market safeguards at a time when demand for blockchain-based equities is accelerating.
Exchanges Push Back as Tokenization Momentum Builds
Tokenized equities — digital representations of publicly listed company shares — have been gaining traction due to 24/7 trading, instant settlement, and lower barriers to access. Yet traditional exchanges say these products are being marketed in ways that could mislead retail investors.
In its submission to the regulator, the WFE said it was “alarmed at the growing number of brokers and crypto-trading platforms offering tokenized U.S. stocks”, adding that these instruments are often promoted as equivalents to official securities even though they operate outside the established regulatory framework.
WFE Calls for Targeted Relief to Protect Market Integrity
The group acknowledged that tokenization is a natural evolution of capital markets but stressed that it must occur under responsible and clearly-defined rules. It warned that broad ‘innovation exemptions’ would risk bypassing long-standing investor protections.
“We simply believe this authority is most effective when exercised in a targeted manner,” the WFE wrote, emphasizing that exemptions should not become a shortcut for crypto platforms seeking to offer stock-like products without meeting full regulatory standards.
The federation urged the SEC to pursue a formal rule making process — allowing public feedback — rather than adopting sweeping exemptions. It also suggested the introduction of a regulatory sandbox to test tokenization models under supervised conditions.
SEC Considers Innovation Pathway as Demand Grows
Under its current crypto-friendly leadership, the SEC has been exploring an “innovation exemption” designed to help blockchain-focused firms bring products to market more quickly. Supporters argue this approach could strengthen the U.S.’ position in digital asset finance, especially as global adoption accelerates.
Major platforms — including Robinhood, Kraken, and Coinbase — are preparing to expand tokenized stock offerings, while traditional institutions such as Nasdaq have also filed proposals to list tokenized equity products through formal exchange channels.
The WFE’s warning underscores a broader tension: how to balance innovation with investor safety as tokenization reshapes capital markets. With both crypto-native firms and legacy exchanges pursuing blockchain-based securities, regulators are under increasing pressure to establish clear, targeted and durable rules.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.