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European regulator says tokenised stocks risk 'investor misunderstanding'
Published by Global Banking and Finance Review
Posted on September 1, 2025
2 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on September 1, 2025
2 min readLast updated: January 22, 2026
EU regulator warns tokenised stocks may mislead investors as they lack shareholder rights. ESMA stresses need for clear communication and safeguards.
By Elizabeth Howcroft
PARIS (Reuters) -Blockchain-based assets which provide exposure to equities could lead to "investor misunderstanding", as they typically do not make the buyer a shareholder in the underlying company, the European Union's securities watchdog said on Monday.
So-called tokenised stocks are a type of blockchain-based asset which are linked to the price of a share in a public company. Broker Robinhood has launched tokenised stocks in the EU while crypto exchange Coinbase is also making a push into the nascent sector.
The European Securities and Markets Authority (ESMA) executive director, Natasha Cazenave, said at a conference in Dubrovnik that several fintech firms had developed offerings that give investors exposure to listed shares or blockchain-based derivatives backed by corporate stock that is held through special purpose vehicles. She did not name individual companies.
"These tokenised instruments can provide always-on access and fractionalisation but typically do not confer shareholder rights," Cazenave said in a speech published on ESMA's website.
"...this can create a specific risk of investor misunderstanding and underlines the need for clear communication and safeguards," she said.
ESMA's concerns echo the World Federation of Exchanges, which last week called on securities regulators to clamp down on tokenised stocks, saying that they create new risks for investors and could harm market integrity.
Crypto enthusiasts say tokenisation will change the underlying infrastructure of financial markets, by allowing assets such as bank deposits, stocks, bonds, funds and even real estate to be traded as blockchain-based tokens.
Cazenave said tokenisation could bring efficiency gains but "most tokenisation initiatives remain small and largely illiquid" so far.
(Reporting by Elizabeth Howcroft; Editing by Tommy Reggiori Wilkes and Ros Russell)
Tokenised stocks are blockchain-based assets linked to the price of a share in a public company, but they typically do not confer shareholder rights.
Tokenised stocks can create a specific risk of investor misunderstanding, as they do not provide the same rights as traditional shares, highlighting the need for clear communication and safeguards.
ESMA's executive director, Natasha Cazenave, expressed concerns about tokenised stocks at a conference, emphasizing the importance of understanding the lack of shareholder rights associated with these instruments.
Crypto enthusiasts believe that tokenisation will revolutionize the infrastructure of financial markets, allowing various assets to be traded more efficiently.
Cazenave noted that while tokenisation could bring efficiency gains, most initiatives remain small and largely illiquid at this stage.
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