Key Concerns Raised
Natasha Cazenave, executive director of the European Securities and Markets Authority (ESMA), highlighted specific risks around tokenised stocks during a conference in Dubrovnik. These blockchain-based instruments mirror equity price movements but do not grant direct shareholder rights such as voting or dividends.
Tokenisation Mechanics
Tokenised stocks operate through special-purpose vehicles that hold the underlying shares, issuing cryptographic tokens representing fractional ownership. While this approach provides 24/7 access and fractional investment, it creates structural differences from direct equity holdings.
Regulatory Context
ESMA’s remarks come as global exchanges including Robinhood and Coinbase expand tokenised stock offerings in the EU. The World Federation of Exchanges recently urged regulators to enforce standardized disclosures and safeguards to protect investors.
Investor Safeguards and Recommendations
- Mandatory disclosures outlining the absence of shareholder rights.
- Independent audits confirming token-backing share custody.
- Clear segregation of tokenised stock holdings from spot equity market operations.
Market Impact
Interest in tokenised stocks has grown among retail clients seeking fractional exposure to high-value equities. ESMA’s call for robust oversight aims to foster innovation while preserving market integrity and preventing consumer harm.
Next Steps
ESMA plans to issue guidance on disclosure requirements for token-issuers. Collaboration between trading venues, custodians, and regulators will be necessary to develop consistent frameworks across EU member states.
Comments (0)