1 day ago
Tokenized stocks, a caller breed of integer assets mirroring the prices of listed companies, could springiness investors a mendacious consciousness of ownership and undermine marketplace confidence, according to a apical European regulator.
Natasha Cazenave, enforcement manager of the European Securities and Markets Authority (ESMA), cautioned that galore tokenized banal products being marketed successful the European Union neglect to assistance existent shareholder rights, specified arsenic voting oregon dividends.
She said that the lack of clarity successful however these assets are presented could pb retail investors to judge they clasp institution shares when, successful reality, they bash not.
Shareholder rights absent
Unlike accepted equity purchases, tokenized stocks are often issued done special-purpose vehicles oregon intermediaries, and the tokens merely way the underlying stock’s price.
Cazenave stressed that portion tokenization promises features similar fractional trading and round-the-clock marketplace access, the lack of ownership rights poses a “specific hazard of capitalist misunderstanding.”
Her remarks travel arsenic platforms including Robinhood and Kraken grow tokenized banal offerings successful Europe and different regions.
The World Federation of Exchanges past week echoed ESMA’s concerns, urging regulators to fortify oversight earlier the assemblage grows larger. The radical warned that without intervention, tokenized products could exposure investors to unexpected risks and harm marketplace integrity.
Efficiency gains inactive elusive
Advocates person argued that tokenization tin modernize concern by lowering costs and broadening entree to assets ranging from equities and bonds to existent estate.
Cazenave acknowledged this imaginable but noted that astir existing projects stay constricted successful scale, illiquid, and acold from delivering the ratio benefits touted by advocates.
For now, European regulators look intent connected balancing innovation with capitalist safeguards, signaling that tokenized stocks volition stay nether scrutiny arsenic the exertion develops.
The station EU regulator warns tokenized stocks whitethorn mislead retail investors appeared archetypal connected CryptoSlate.
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