PARIS, Sept 1 (Reuters) - Blockchain-based assets which

provide exposure to equities could lead to "investor

misunderstanding", as they typically do not make the buyer a

shareholder in the underlying company, the European Union's

securities watchdog said on Monday.

So-called tokenised stocks are a type of blockchain-based

asset which are linked to the price of a share in a public

company. Broker Robinhood has launched tokenised stocks

in the EU while crypto exchange Coinbase is also making

a push into the nascent sector.

The European Securities and Markets Authority (ESMA)

executive director, Natasha Cazenave, said at a conference in

Dubrovnik that several fintech firms had developed offerings

that give investors exposure to listed shares or

blockchain-based derivatives backed by corporate stock that is

held through special purpose vehicles. She did not name

individual companies.

"These tokenised instruments can provide always-on access

and fractionalisation but typically do not confer shareholder

rights," Cazenave said in a speech published on ESMA's website.

"...this can create a specific risk of investor

misunderstanding and underlines the need for clear communication

and safeguards," she said.

ESMA's concerns echo the World Federation of Exchanges,

which last week called on securities regulators to clamp down on

tokenised stocks, saying that they create new risks for

investors and could harm market integrity.

Crypto enthusiasts say tokenisation will change the

underlying infrastructure of financial markets, by allowing

assets such as bank deposits, stocks, bonds, funds and even real

estate to be traded as blockchain-based tokens.

Cazenave said tokenisation could bring efficiency gains but

"most tokenisation initiatives remain small and largely

illiquid" so far.

(Reporting by Elizabeth Howcroft; Editing by Tommy Reggiori

Wilkes and Ros Russell)