AsianFin -- A coalition representing some of the world’s largest stock exchanges is urging securities regulators to take action against tokenized stocks, warning that these blockchain-based instruments could pose significant risks to investors and undermine market integrity.

Tokenized equities are digital tokens that represent ownership of a company’s shares on a blockchain. While they reflect the value of the underlying securities, holders of these tokens do not gain traditional shareholder rights, such as voting or dividends, in the actual company.

Major players in the cryptocurrency and brokerage space, including Coinbase and Robinhood, are actively exploring this emerging sector, which has the potential to disrupt traditional securities trading.

Supporters of tokenized equities argue that they could reduce trading costs, accelerate settlement times, and enable 24/7 trading, offering a more flexible alternative to conventional markets. However, regulators and stock exchanges caution that the risks associated with these products—ranging from investor protection to compliance challenges—warrant stricter oversight before wider adoption.