Main Points :
- EU regulator ESMA warns that tokenized stocks often lack shareholder rights, risking investor misunderstanding.
- Tokenization offers accessibility, fractional ownership, and trade efficiency—but remains small-scale and illiquid.
- World Federation of Exchanges urges stricter oversight to preserve market integrity.
- MiCA regulation and EU pilot programs pave the way toward clearer frameworks for tokenized financial instruments.
- Market interest grows: Robinhood, Coinbase, and Gemini expanding tokenized stock access in the EU.
- Balance between financial innovation and strong investor protections is essential.
1. Regulatory Alert: ESMA Sounds the Alarm
At a recent conference in Dubrovnik, ESMA Executive Director Natasha Cazenave cautioned that tokenized stocks—blockchain-based assets tracking stock prices—do not usually confer real shareholder rights like voting or dividends, potentially misleading investors. While these tokens offer 24/7 accessibility and fractionalization, they can resemble ownership without the actual protections—raising significant concern about investor misunderstanding.
2. Innovation Versus Liquidity: The State of Tokenization
Cazenave acknowledged that the EU has led pioneering efforts since 2019—including pilots through the European Investment Bank and Germany’s finance ministry—to tokenize assets on the blockchain. These initiatives demonstrated that tokenization can expand investment access, reduce issuance costs, and enhance secondary trading efficiency. However, she emphasized these initiatives remain niche, lacking liquidity, and generally limited to private placements with low interoperability between issuance platforms.
3. Global Alarm: Calls for Regulation Intensify
The World Federation of Exchanges (WFE) has echoed ESMA’s concerns, urging regulatory authorities—including ESMA, IOSCO, and the U.S. SEC—to impose stricter rules on tokenized stocks. They warn that these derivative-like instruments may undermine investor protection and market integrity, especially when platforms like Robinhood and Coinbase market them as equivalent to real shares.
4. Regulatory Evolution: MiCA and Pilot Programs in Focus
ESMA highlighted the EU’s blockchain pilot regime that allows regulated market infrastructures to test tokenized products under certain regulatory exemptions. Also instrumental is the Markets in Crypto‑Assets Regulation (MiCA), which came into effect across the EU in late 2024, offering harmonized legal frameworks for crypto-asset services—including future tokenized financial instruments.
MiCA mandates authorization for crypto-asset service providers (CASPs), ensuring regulatory consistency, transparency, and investor safeguards—lessons that are directly relevant as tokenized securities scale.
5. Market Developments: Robinhood, Coinbase, and Gemini
- Robinhood launched tokenized versions of over 200 U.S. stocks (including OpenAI and SpaceX) for EU customers in June 2025. While offering commission-free, extended trading hours, these tokens remain contracts tied to stock price—not actual equity (i.e. no ownership).
- Coinbase is seeking regulatory approvals to launch its own tokenized stock offerings—still under scrutiny in both the EU and U.S.
- Gemini has introduced 14 additional tokenized U.S. stocks available to EU investors via the Arbitrum blockchain—further expanding investor access to blue-chip assets on-chain.
6. Innovation vs. Traditional Finance: Skepticism from Established Institutions
Leaders in traditional finance voice reservations about tokenized stocks:
- Charles Schwab’s CEO criticized tokenization for lacking real investor need and warned about transparency, liquidity, and regulatory concerns.
- Interactive Brokers’ CEO called Robinhood’s tokenized stocks derivative-like, lacking portability and true ownership rights.
- Critics like Bloomberg’s Matt Levine caution tokenization could weaken regulatory protections by sidestepping disclosure requirements.
7. Global Growth and the Stakes Ahead
Tokenization of financial assets is burgeoning: some forecasts estimate the tokenized assets market could hit US $2 trillion by 2030, driven by institutional adoption in digital treasuries and private credit, while broader projections stretch even higher. Ainvest reports that tokenized stocks alone reached approximately US $25 billion in 2025.
Conclusion: Bridging Innovation with Safeguards
Tokenized stocks epitomize the frontier of financial innovation—offering 24/7 access, low barriers to entry, and fractional ownership. They promise to democratize investing and modernize capital markets. Yet, without clear ownership rights and robust regulatory frameworks, they risk becoming speculative tech-wrapped illusions rather than genuine equity.
The EU, through MiCA and pilot programs, is taking thoughtful steps to shape a safer path forward. Regulators, market infrastructures, and investors must collaborate to ensure that tokenized financial instruments are both innovative and trustworthy. Navigating this balance will be essential to transforming tokenization from a risky novelty into a sustainable pillar of the future financial ecosystem.
