World Federation of Exchanges calls for crackdown on tokens that mimic stocks

The World Federation of Exchanges (WFE) called on global regulators to address the risks posed to stock tokenization by unregulated brokers and crypto asset trading platforms. The organization wrote to the U.S. Securities and Exchange Commission's Cryptocurrency Working Group, the International Organization of Securities Commissions' Fintech Working Group and the European Securities and Markets Authority, emphasizing concerns about investor protection and market integrity. The WFE pointed out that although such tokens mimic the performance of U.S. stocks, they often lack the shareholder rights and protection mechanisms corresponding to traditional stocks, which may lead to regulatory arbitrage, legal uncertainty and lack of transparency, and undermine public confidence in regulated markets. Key issues include liquidity fragmentation, damage to retail investor rights and insufficient platform risk disclosure, as well as custody and legal recourse risks. The WFE urged regulators to take four measures: apply existing regulations equally to tokenization and traditional instruments, ensure consistency in disclosure and settlement standards, strengthen international regulatory coordination, and clarify the legal framework for ownership and custody.