The World Federation of Exchanges (WFE) has written to the US Securities and Exchange Commission’s Crypto Task Force, IOSCO’s Fintech Task Force and the European Securities and Markets Authority, warning that unregulated brokers and crypto-asset trading platforms are increasingly offering third-party tokens that replicate mostly US equities without delivering the same rights and market safeguards. The WFE flags risks including liquidity fragmentation and weaker price discovery if trading moves off regulated venues, inadequate disclosure of the absence of shareholder rights such as voting and dividends, uncertainty over custody and enforceability if a platform fails, regulatory arbitrage through cross-border gaps, and reputational and legal exposure for issuers of the underlying shares. It urges IOSCO and member regulators to apply technological neutrality and regulatory parity to tokenised and traditional instruments by imposing equivalent disclosure, trading and settlement standards, to strengthen cross-border supervisory coordination, and to clarify legal frameworks for ownership, rights and custody in tokenised ecosystems.
World Federation of Exchanges 2025-08-26
World Federation of Exchanges urges regulators to crack down on third-party tokenised equities that mimic shares
The World Federation of Exchanges has alerted the US SEC, IOSCO, and ESMA about risks from unregulated brokers and crypto platforms offering tokens mimicking US equities without equivalent rights. The WFE calls for technological neutrality, regulatory parity between tokenised and traditional instruments, enhanced cross-border supervisory coordination, and clarification of legal frameworks for ownership and rights in tokenised ecosystems.