Transfer Agents Urge SEC to Favor Issuer-Backed Stock Tokens Over Crypto Platforms’ Synthetic Versions

A Wall Street trade group is pushing the SEC to draw a hard line in the fast-growing market for tokenized stocks, asking regulators to give favorable treatment to company-authorized tokens while excluding the third-party versions crypto platforms have rushed to launch. The Securities Transfer Association laid out the request in a July 1 letter.

The STA, founded in 1911, represents transfer agents that maintain official shareholder records for more than 15,000 issuers. It argued that only issuer-sponsored tokens, recorded on a company’s books and carrying real voting and dividend rights, should qualify for any SEC innovation exemption, pilot program, or permanent framework. Third-party tokens, it said, leave holders exposed to the credit, custody, and operational risk of the platform that issues them.

Citi projects tokenized securities could reach $5.5 trillion by 2030, with tokenized stocks alone at $2.6 trillion. Most of today’s roughly $2 billion tokenized-stock market runs on the third-party synthetic model led by Ondo Finance and Kraken’s xStocks and is largely off-limits to US retail. How the SEC classifies these products will decide what legal rights buyers actually receive. The agency delayed a planned innovation exemption this spring over these same synthetic-token concerns.

The SEC recognized the split between custodial and synthetic third-party tokens in a January staff statement, though it has yet to propose formal tokenization rules. The debate is sharpening as Coinbase, Robinhood, Nasdaq, and the NYSE all expand plans to move equities onchain.

Related Listen: Tokens vs Equity, Lighter x Robinhood – The Chopping Block

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