UK-based World Federation of Exchanges has written to three regulatory bodies, urging a clampdown on the so-called 'tokenized stocks', Reuters reported on Monday, citing the letter.
The letter is said to have been sent to the U.S SEC's Crypto Task Force, the European Securities and Markets Authority, and IOSCO's Fintech Task Force.
Tokenised equities are blockchain-based tokens created to represent shares in companies, but investors do not become shareholders in the underlying company, the newswire noted.
In June, Coinbase Global (COIN) was reportedly seeking permission to offer "tokenized equities" to its customers. The move would allow its customers to trade stocks on the blockchain.
Similarly, Robinhood Markets (HOOD) unveiled U.S. stock and ETF tokens in the European Union, enabling eligible users to trade more than 200 digital versions of real company shares and ETFs on the blockchain.
Later, OpenAI issued a statement denying any affiliation with the tokenized equity offered by Robinhood, emphasizing that the tokens do not represent real ownership or equity in the company.
"We are alarmed at the plethora of brokers and crypto-trading platforms offering or intending to offer so-called tokenised U.S. stocks," the WFE reportedly wrote in the letter.
"These products are marketed as stock tokens or the equivalent to stocks when they are not," said the group representing the biggest stock exchanges.
The WFE noted that the companies whose stock is being mimicked could suffer reputational damage if the tokens fail, and regulators should apply securities rules to tokenised assets, according to Reuters.