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The Securities Transfer Association is asking the SEC to treat only issuer-authorized tokenized shares, those recorded in a company's official shareholder register, as true tokenized stock, and to push every other blockchain-based equity product into a separate regulatory box.
In a letter to the agency, the trade group argued that third-party tokenized stocks leave investors exposed to the credit, custody and operational risks of the issuing platform rather than giving them a direct legal relationship with the underlying company. The group called for any innovation exemption, pilot program, no-action position or permanent framework to apply only to issuer-sponsored models, and for the SEC to require issuer consent before any platform markets a product as tokenized shares of a public company.
The roughly $2 billion tokenized-stock market is currently dominated by third-party synthetic products, led by Ondo Finance and Kraken's xStocks, which remain generally unavailable to US retail. Issuers Figure and Securitize have taken the issuer-sponsored route with their own onchain shares, while Dinari became the first broker-dealer-registered tokenized equity platform under the custodial model. Global bank Citi has projected tokenized securities could become a $5.5 trillion market by 2030, with tokenized stocks reaching $2.6 trillion.
Why it matters
The letter lands at the precise moment US regulators are drafting the rulebook for moving equities onto blockchain rails. The SEC recognized the structural split in a January staff statement, separating issuer-sponsored, custodial and synthetic tokenization, but has yet to propose formal rules. An innovation exemption aimed at fostering tokenized securities is expected, though its timeline and scope are unspecified.
Computershare, transfer agent for more than half of the S&P 500, and Equiniti, both STA members, publicly backed the call. The dispute is also economic: critics including Centrifuge chief legal officer Eli Cohen argue transfer agents are protecting a franchise "paid by issuers," since wide adoption of non-issuer securities would shrink their role in the stack.
Market impact
The STA also pressed the SEC to modernize the Direct Registration System, which routes transfers through DTCC and is too slow for tokenized markets, a bottleneck the group says lets synthetic platforms outpace issuer-sponsored models on speed.
Frequently asked questions
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What is the Securities Transfer Association asking the SEC to do?
The STA wants the SEC to limit any future tokenized-securities framework to issuer-sponsored tokens, those authorized by the company and recorded in its official shareholder register, and to require issuer consent before any platform markets a product as tokenized shares of a public company.
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Why are transfer agents pushing back on third-party stock tokens?
The STA argues third-party tokens leave investors exposed to the credit, custody and operational risks of the issuing platform rather than giving them a direct legal relationship with the underlying company, blurring investor rights and shareholder protections.
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How big is the tokenized-stock market today?
The tokenized-stock market is roughly $2 billion, dominated by third-party synthetic products such as Ondo Finance and Kraken's xStocks, which remain generally unavailable to US retail investors. Citi projects tokenized securities could reach $5.5 trillion by 2030, with tokenized stocks at $2.6 trillion.
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What are the different tokenization models the SEC is weighing?
Issuer-sponsored tokens are authorized by the company and recorded in its official register. Custodial tokens represent shares held by a regulated intermediary. Synthetic tokens offer only economic exposure to a stock's price. The SEC's January staff statement acknowledged all three as distinct structures.
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What else did the STA ask the SEC to change?
Beyond the issuer-sponsored versus third-party split, the STA urged modernization of the Direct Registration System, which routes transfers through DTCC and is too slow for tokenized markets, and called on the SEC to work with DTCC and transfer agents to streamline those transfers.
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