Wall Street transfer agents urge SEC to favor issuer-backed stock tokens in U.S. market rules

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Highlights

Transfer agents including the Securities Transfer Association urge the SEC to grant regulatory advantages only to issuer-sponsored tokenized securities, excluding synthetic and third-party token models.
Market participants expect significant growth, with Citi projecting tokenized securities reaching $5.5 trillion by 2030—including $2.6 trillion in tokenized stocks—intensifying pressure for clear SEC rules.
Tokenization initiatives accelerate as DTCC starts testing its platform in July, Robinhood expands to 120 countries, and Coinbase prepares for onchain U.S. stock offerings despite lacking formal SEC rules.

SEC rule debate centers on token structure

As reported by CoinDesk, the Securities Transfer Association, a trade group for transfer agents, is urging the Securities and Exchange Commission to give preferential treatment to issuer-sponsored tokenized securities as it develops rules for bringing traditional shares onto blockchain networks.

In a letter to the agency, the group says tokenized shares should qualify as true securities only when they are authorized by the issuing company and recorded in its official shareholder register. It argues that third-party tokens, including synthetic structures and some intermediary-issued products, can blur ownership rights and expose investors to platform, custody and counterparty risks rather than creating a direct legal relationship with the issuer.

The STA says any innovation exemption, pilot program, no-action position, or permanent framework for tokenized securities should apply only to issuer-sponsored models. It also calls on the SEC to require issuer consent before platforms market products as tokenized shares of public companies, and to impose clear disclosures and compliance safeguards on any permitted third-party structures.

Transfer agents sit at the center of this issue because they maintain official shareholder records, process ownership transfers and corporate actions, and determine legal ownership of securities. The SEC's January staff statement already distinguishes between custodial tokenized security entitlements and synthetic products, signaling that regulators recognize material differences among tokenization models even if formal Commission rules have yet to be proposed.

The letter also calls for modernization of the Direct Registration System, saying the current process for moving shares between DTCC broker-held accounts and transfer-agent records is too slow for tokenized markets. The STA urges the agency to work with DTCC and transfer agents to streamline those transfers as digital securities move toward broader adoption.

Market expansion raises stakes for issuers and investors

The debate is intensifying as Wall Street firms, brokerages and crypto platforms race to build a tokenized securities market that some expect to reach significant scale. Citi projects tokenized securities could become a $5.5 trillion market by 2030 in its base case, including $2.6 trillion in tokenized stocks.

Today, much of the tokenized stock market follows third-party models. The article cites Ondo Finance and Kraken's xStocks among synthetic offerings, while Figure and Securitize have issued their own shares onchain under an issuer-sponsored structure. Dinari is pursuing a custodial model and earlier this month Ondo Finance also moved toward that approach through a licensed transfer agent and Broadridge support for proxy voting, disclosures and shareholder communications.

Industry executives backing the STA say issuer-authorized tokens preserve governance rights, communications channels and legal clarity for shareholders. Computershare and Equiniti both argue that regulators should clearly distinguish issuer-backed tokenized shares from wrapper-style or synthetic products that can resemble equity ownership without appearing in an issuer's own records.

Other market participants say the SEC should avoid treating all third-party tokenization models alike. Dinari and tZERO argue that custodial structures preserving true stock ownership deserve separate consideration from synthetic exposure, while legal and market specialists say third-party tokens may still serve a role if they are clearly classified as a different financial instrument.

The issue is gaining urgency as more platforms expand blockchain-based equity offerings. Robinhood has broadened its stock token product to users in 120 countries, Coinbase plans onchain shares of U.S. stocks, and the DTCC plans to begin testing its tokenized securities platform in July ahead of a broader rollout in October. The SEC has not yet proposed formal tokenized securities rules, but its eventual approach is likely to shape how tokenized stocks develop in the U.S. and what rights investors receive.

Our earlier coverage of the UK’s tokenised wholesale finance roadmap outlined a 12-month plan to accelerate blockchain-based capital markets, including issuing a sovereign bond onchain and proving tokenised assets can be used as collateral in repo transactions. We noted the projected economic upside and the competitive pressure on the UK to move quickly as tokenisation of real-world assets expands globally.

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