Wall Street transfer agents lobby SEC, warning that third-party tokens pose risks to market integrity The Securities Transfer Association, an industry group for transfer agents, said company-authorized tokenization should receive preferential treatment under future rules. – An…
dustry group for transfer agents is urging the SEC to favor issuer-sponsored tokenized shares over third-party stock tokens as it writes rules for moving U.S. equities onto blockchains. – The group argues that only issuer-authorized tokens recorded in official shareholder registers should qualify as true tokenized stock, warning that synthetic and other third-party models can blur investor rights and add platform and custody risks. – Some, however, say that regulators should distinguish between issuer-backed, custodial and synthetic structures, as Wall Street and crypto firms race to build a multitrillion-dollar tokenized securities market. As the competition to tokenize capital markets heats up, the debate over how stocks should move onto blockchain rails is making its way to U.S. regulators
The Securities Transfer Association (STA), a trade group representing transfer agents and its members, which include major Wall Street institutions, is urging the Securities and Exchange Commission (SEC) to give preferential treatment to issuer-sponsored tokenized securities compared to tokens issued by intermediary firms as it develops rules for bringing traditional securities onto blockchain rails. The STA argued in a letter to the agency that blockchain-based shares should be actual securities authorized by the underlying issuer and reflected in its official shareholder records rather than tokens created by unaffiliated platforms. “The distinction is fundamental,” the letter said. “An Issuer-Sponsored Token is an actual share or other security of the Corporation.” Meanwhile, holders of third-party tokenized stocks instead face the credit, custody and operational risks of the platform issuing those…