The European Securities and Markets Authority warned that issuing multiple tokenized versions of the same stock could fragment liquidity, according to its latest Trends, Risks and Vulnerabilities Report for the first half of 2026. ESMA said tokenization may offer benefits such as improved efficiency, broader investor access, programmability and atomic settlement, but questioned whether these advantages are realized in wrapper structures. The report noted that underlying stock ownership remains off-chain, leaving no single on-chain source of truth and making self-custody only indirectly achievable. The authority also said tokenized structures add intermediation, complexity and risk, while settlement benefits remain limited because the cash leg is typically settled separately. The report also warned of risks from closer ties between crypto assets and traditional finance and said prediction markets have not yet developed significantly in Europe because major platforms lack EU licenses in most cases.