Global regulators send a "warning to the SEC": Manage U.S. tokenized stocks properly to avoid harming the global economy.

ESMA, IOSCO, and WFE have rarely joined forces to pressure the SEC, directly pointing out that tokenized stocks fail to provide complete shareholder protection, exposing investment blind spots. (Background: Wall Street giant Citadel Securities has launched a battle against tokenized U.S. stocks, sending a letter to the SEC: opposing the provision of innovative exemptions.) (Additional background: Robinhood reveals that many private companies are preparing to issue “tokenized U.S. stocks,” CEO: Robinhood can meet the highest compliance standards.) The European Securities and Markets Authority (ESMA), the International Organization of Securities Commissions (IOSCO), and the World Federation of Exchanges (WFE) jointly sent a letter to the U.S. Securities and Exchange Commission (SEC) on the 25th, unusually warning of significant risks associated with the emerging “tokenized stocks.” This regulatory joint effort across the Atlantic serves as a loud alarm for the rapidly expanding $26 billion tokenized securities market. The digital shadow packaged as “stocks” According to Reuters reports, regulators pointed out that tokenized stocks are merely a thin layer of blockchain covering, lacking the voting rights, dividend entitlement, and regulatory custody that traditional stocks provide. The WFE candidly stated: “These products are marketed as stock tokens or equivalent to stocks, but this is not the case.” Exaggerated marketing leads to misplaced rights, and if holders mistakenly believe they possess complete shareholder identification, the risks will be amplified during legal unforeseen events. Behind the apparent trading convenience lie three layers of costs. First, legal substance is unclear: whether blockchain records can equal regulated securities custody remains a vast gray area. Second, shareholder rights are incomplete: token holders often cannot participate in shareholder meetings and may not receive dividends. Third, market order is fragile: a trading environment lacking centralized supervision is easily manipulated, triggering a chain reaction that harms the reputation of the underlying companies. Despite this, market demand continues to grow robustly, with tokenized stock trading volume expected to surge 26.6% to $360.5 million by 2025, yet still representing a small proportion of the overall tokenized securities market. Regulatory bodies thus choose to “strike early and accurately,” avoiding the drag on the traditional financial system from vague concepts as they scale. SEC’s innovative faction faces off against protective faction The current situation of the U.S. SEC is far from easy. Chairman Paul Atkins described tokenization last month as an “innovation” that should be promoted, while fellow commissioner Hester Peirce insisted that digital securities still fall under the category of securities and must fully comply with existing regulations. Now, collective pressure from Europe and international organizations is effectively demanding that the SEC mark market boundaries with brighter red lines, particularly in the three areas of legal ownership, custody models, and sales promotions. The SEC’s internal cryptocurrency task force is attempting to balance “not stifling innovation” with “preventing systemic risks.” This time, the global counterparts have clearly stated their position, forcing the SEC to make a clearer choice between ideals and reality. Next step: a turning point in digital asset regulation This joint letter is not only aimed at a single product but sets a precedent for the entire digital asset market. Without substantial regulatory support, no matter how flashy the technical packaging, it could all be an empty shell. Investors, issuers, and platforms that ignore the gap between “digital appearance” and “legal substance” will find it difficult to protect themselves in future institutional restructuring. In the historical tide of tug-of-war between fintech and traditional regulations, every tightening of regulation may seem to bind innovation, but it also lays the foundation for the sustainable operation of the market. Tokenized stocks are just one example among many innovative products; after the storm, what can truly remain are those technological solutions that embed both efficiency and compliance. As this incident shows, the endpoint of the digital revolution is not complete decentralization, but rather finding a moderate path capable of carrying trust, liquidity, and the rule of law amidst the repeated struggles between regulation and market.