Crackdown on ‘Tokenised Stocks’: Implications for Investors and Business Owners in Oman’s Stock Exchanges
A coalition of the world’s largest stock exchanges has urged securities regulators to take action against tokenized stocks, citing potential new risks for investors and concerns over market integrity. This call was outlined in a letter reviewed by Reuters.
Tokenized equities are blockchain-based representations of shares in companies. While they denote ownership of the securities, investors do not gain shareholder status in the underlying company.
Notable players in this emerging sector include crypto exchange Coinbase and brokerage firm Robinhood, both of which are actively exploring opportunities in tokenized stocks. Proponents argue that these innovations can reduce trading costs, expedite settlement processes, and enable continuous trading.
In a letter dispatched to three regulatory agencies last Friday, the World Federation of Exchanges (WFE) expressed its concern that these tokens “mimic” traditional equities without offering the same rights or protections. The WFE highlighted its apprehension regarding the increasing number of brokers and crypto trading platforms marketing tokenized US stocks.
Moreover, the WFE cautioned that issuers could face reputational harm if these tokens fail. It recommended that regulators enforce existing securities regulations on tokenized assets, clarify legal frameworks concerning ownership and custody, and stop them from being advertised as equivalent to standard stocks. — Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The push against tokenised stocks by major stock exchanges underscores significant risks for investors in Oman, particularly as local industries explore blockchain options. Businesses must be aware of potential regulatory challenges as authorities grapple with ensuring market integrity. Forward-looking investors should carefully assess their involvement in this sector, ensuring alignment with emerging regulations to avoid reputational damage and quantum shifts in asset management paradigms.
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