EU regulators warn: Tokenized stocks may mislead retail investors

ChainCatcher news, according to market news, the Executive Director of the European Securities and Markets Authority (ESMA), Natasha Cazenave, indicated that tokenized stocks, as a new type of digital asset, are linked to the stock prices of listed companies but may create a false sense of ownership for investors, thereby undermining market confidence.

Cazenave warned that many tokenized stock products currently promoted in the EU do not grant investors actual shareholder rights, such as voting rights or dividend distribution rights. She stated that due to the lack of transparency in the presentation of these assets, retail investors may mistakenly believe they own company stocks when, in fact, they do not.

Cazenave emphasized that although tokenization features fractional share trading and 24/7 market access, the absence of ownership rights poses a "specific risk of investor misunderstanding." Supporters argue that tokenization can drive financial modernization by reducing costs and broadening access to assets (covering various assets from stocks and bonds to real estate).

Cazenave acknowledged this potential but pointed out that most existing projects are currently limited in scale and lack liquidity, far from achieving the efficiency improvements claimed by supporters.