Crypto firms race to tokenize stocks — regulators warn of risks

Crypto firms race to tokenize stocks — regulators warn of risks

Some crypto companies are aggressively launching tokens pegged to stocks, effectively creating tradable digital versions of equity shares. Reuters reports that this movement is catching the attention of traditional financial firms and regulators who worry about investor protection and market stability. 

The concerns stem from the fact that tokenized stocks may lack standard rights of shareholders (voting, dividends, legal recourse). Critics argue that pushing these products without strong regulatory guardrails could expose retail investors to unexpected risks. 

As the trend grows, the battle between innovation and protection intensifies. It remains to be seen whether regulators will step in with stricter rules — especially regarding transparency, compliance, and how tokenized equities interact with traditional stock markets.