The digital transformation of the financial sector never ceases to amaze. After cryptocurrencies and NFTs, tokenized shares, new blockchain products that enable the trading of shares in companies without the mediation of traditional stock exchanges, are coming on the scene.
Proponents argue that tokens reduce costs and speed up settlement, while regulators and traditional exchanges warn of the risks of such innovations.
These are digital tokens that represent the value of shares of a certain company. However, unlike real shares, token owners do not become formal shareholders – they do not have the right to vote or directly participate in the management of the company. In practice, this means that tokens track the share price, but are not legally identical to equity shares.
American platforms like Coinbase and Robinhood recognized the potential and started offering tokenized shares to users in the European Union.
They aim to attract the younger generation of investors who are looking for flexibility, 24-hour trading and easy access to global markets. A similar logic already exists in the world of cryptocurrencies – the possibility of trading “anytime and everywhere” fits into the mentality of the digital economy.
However, the world’s largest stock exchanges gathered in the World Federation of Stock Exchanges (WFE) warn that such products can damage the integrity of the market and confuse investors. In a letter to regulators in the US and Europe, the WFE states that the tokens are often presented as “share equivalent”, although they are not, reports Reuters.
In addition to the risks for small investors, stock exchanges also warn of possible damage to the reputation of companies whose shares are tokenized without their knowledge and control. If the token fails, the perception of the brand may be damaged, even though the issuer has no formal connection with the product.
The US SEC already emphasizes that tokenized securities must comply with existing regulations, while the European Union is preparing a clearer legal framework through the MiCA (Markets in Crypto-Assets) regulation. The biggest challenge remains the legal uncertainty – who is the real owner of the token, who guarantees the security of custody and whether the product can be advertised as a stock.
