Crypto tokens tied to traditional financial assets couldpresent new risks for investors, the global securities regulator IOSCO said today(Tuesday). The regulator highlighted concerns as the finance industry remainsdivided over the merits of "tokenization."Digitalassets meet tradfi in London at the fmls25While regulators warn of risks, interest in tokenization hasgrown this year, with products offered through online brokers. Traditionalbanks have also adopted blockchain-based tokenization, processing financialassets in hours, while similarprocesses on crypto platforms may take months. This highlights unevenadoption and efficiency across market participants.IOSCO Flags New Risks in TokenizationIOSCO, which represents regulators covering almost all ofthe world’s securities markets, said most risks related to tokenization arealready addressed by existing frameworks. However, the organization noted thatthe underlying technology may introduce new risks and vulnerabilities.Tuang Lee Lim, chair of IOSCO's board-level fintechtaskforce, said that while adoption is still "limited," tokenizationcould "reshape" the way financial assets are issued, traded, andserviced.PYMNTS: Securities Regulator IOSCO Warns Tokenization ‘Introduces New Risks’: A global securities regulator is warning of potential risks associated with tokenization. In a report issued Tuesday (Nov. 11), the International… https://t.co/uwZQAQckuh #payments #fintech pic.twitter.com/U2et5iLxZb— Rick Telberg (@CPA_Trendlines) November 11, 2025Tokenization Faces Spill-Over Market ConcernsThe regulator said different structures of tokenized assetscould make investors unsure whether they own the underlying asset or only thecrypto token. Third-party token issuers also create counterparty risks. IOSCOadded that these concerns echo warnings from the European Union's securitiesregulator in September."Tokenization could also suffer from potentialspill-over effects from increased inter-linkages with the crypto assetmarkets," IOSCO said.Wall Street Cautious Despite Tokenization ExperimentsSome mainstream financial firms, including Nasdaq, have beenexploring tokenization. Other Wall Street players have expressed caution. Whileinstitutions have experimented with blockchain-based asset versions for years,IOSCO said actual adoption remains "limited."Supporters of tokenized assets argue that blockchain canreduce trading costs, speed up settlement, allow 24/7 trading, and attractyounger investors. IOSCO, however, said that "efficiency gains areuneven" because market participants still rely on traditionalinfrastructure for trading.This article was written by Tareq Sikder at www.financemagnates.com.