The Securities Transfer Association of the United States lobbies the SEC: Third-party stock tokens may threaten market integrity

Odaily reported that as competition in the capital market for tokenization heats up, the U.S. Securities Transfer Association (STA) recently submitted a letter of opinion to the U.S. Securities and Exchange Commission (SEC), warning that stock tokens issued by third-party institutions may undermine market integrity, and urging regulators to prioritize support for tokenized securities authorized and issued by listed companies in future rulemaking.

STA represents multiple Wall Street transfer agent institutions. Its members believe that true tokenized stocks should be formally authorized by the issuing company and recorded in the official shareholder register, rather than "wrapped" token products created by independent platforms.

The association pointed out that third-party stock tokens could confuse investors about their actual equity holdings and expose them to platform credit, custodial, and operational risks, making it impossible to establish direct legal relationships with listed companies. Therefore, any innovative exemptions, pilot projects, or permanent regulatory frameworks targeting tokenized securities should be prioritized for issuer-supported models. STA also urged the SEC to reform the existing Direct Registration System (DRS), as the current U.S. securities custody system struggles to meet the real-time transfer and settlement requirements of on-chain securities. It suggested that regulators work with the Depository Trust & Clearing Corporation (DTCC) to optimize digital securities infrastructure.

Currently, the global tokenized stock market of about $2 billion is mainly dominated by third-party models, including products launched by Ondo Finance and certain exchanges, while institutions such as Securitize and Figure adopt issuer authorization models. (CoinDesk)